CORRECTED - Canada's Walkaway thrives by easing risk of buying car

(Clarifies examples in paragraph three. Coverage does not kick-in in the case of mortgage default)

By John McCrank

TORONTO, March 5 (Reuters) - A company that allows consumers who lose their jobs to walk away from their car payments is one of those rare businesses that's thriving thanks to the recession that has gripped the North American economy.

Privately owned Walkaway, which operates in the United States, Canada and Australia, sells a form of insurance that takes its customers off the hook in the event of a job loss, a disabling injury or certain other "life-changing" events.

Say you're self-employed and have to declare bankruptcy, or maybe you have been transferred halfway around the world. In those cases, simply turn in your keys and, well, walk away scot-free from your car obligations. No strings attached.

Vincent Beretta, founder and chief executive of Walkaway Canada, said the idea of marketing so-called vehicle return insurance through car dealerships came to him about 10 years ago, and it was immediate hit.

But with the ranks of the unemployed swelling and consumer confidence in the tank, the good times have gotten even better for the company. By taking away much of the risk in making a big-ticket purchase, its insurance also may help North America's decimated car industry sell more vehicles to nervous consumers than they might have otherwise.

"Dealers resonated with it immediately and we had almost 30 percent of the market (of Ontario's auto dealers) within 18 months," said Beretta in a recent Reuters interview.

Doug Phillips, a salesman at Tony Graham Toyota in Ottawa, said customers have taken to the program and it helps him sell more cars.

"When the times are tough like they are now, they know that if something happens and they lose their job, they are going to be protected and it won't hurt their credit rating," he said.

"We've had a lot of cars returned, we've had a lot of customers come back and repurchase cars, who were very happy that when times got a little rough, they could turn in their car, and when times got a little bit better and they're back to buy another."

The program is open to anyone, regardless of age or preexisting health conditions.

In order to underwrite that type of open policy, Walkaway needed to have nearly every transaction by participating dealers include Walkaway coverage. To accomplish that, the company decided early on to make the program free for the first 12 months after the purchase or lease of a vehicle.

Customers were given the choice of buying extended or enhanced versions at the time of buying a car, but there is no option to take the insurance later. It's a take-it-or-leave-it deal. "We're not calling anyone," said Beretta.

He said the company recently saw a spike in sales for its high security products, which give temporary relief from auto payments, without the obligation of returning the vehicle.

After launching in Canada, the company quickly expanded into the United States, and more recently Australia.