Its to do with cars that are bought through finance IIRC. If you write it off, GAP protection will ensure that the value of finance outstanding matches what you you get from insurance company.
IE - you have a Clio on finance, its trade price is 10k but finance payments are still 12k, if you write it off, GAP ensures that the 2k difference is covered rather than the insurance company just giving you 10k for a car that still has 12k outstanding on it.