Gap Insurance in California (2024)

Purchasing gap insurance could protect many drivers from paying out of pocket if their car is totaled.

Angela Brown
Written byAngela Brown
Angela Brown
Angela Brown
  • 17+ years in insurance and personal finance writing

  • In-depth knowledge of home and real estate topics

Angela is an insurance and personal finance expert who uses her experience to create content that helps readers understand important and complex topics.

Featured in

media logomedia logomedia logo
Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

Featured in

media logomedia logomedia logomedia logo

Updated October 30, 2024

Save up to $852 by comparing quotes from the top 100+ insurance companies

Excellent
Secure. Free. Easy-to-use.
ProgressiveLiberty MutualAllstate
Advertiser Disclosure

At Insurify, our goal is to help customers compare insurance products and find the best policy for them. We strive to provide open, honest, and unbiased information about the insurance products and services we review. Our hard-working team of data analysts, insurance experts, insurance agents, editors and writers, has put in thousands of hours of research to create the content found on our site.

We do receive compensation when a sale or referral occurs from many of the insurance providers and marketing partners on our site. That may impact which products we display and where they appear on our site. But it does not influence our meticulously researched editorial content, what we write about, or any reviews or recommendations we may make. We do not guarantee favorable reviews or any coverage at all in exchange for compensation.

Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.

Cheapest recent rates in California

Recent California car insurance prices for Nissan, Hyundai, Chevrolet , and more.

*Quotes generated for Insurify users from California within the last 10 days. Last updated on October 30, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from October 30, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

*Quotes generated for Insurify users from California within the last 10 days. Last updated on October 30, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from October 30, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

Auto insurance helps protect you financially in an auto accident or incident. But if your vehicle is a total loss and you still have a car payment, your insurance coverage may not offer enough protection to pay off your loan. Gap insurance provides additional protection that covers the financial gap between what your insurance pays on your policy and what you still owe on your car loan.

Gap insurance won’t be necessary for everyone, but if you purchase or lease a new vehicle, you should consider gap coverage to help protect against being left with a bill for a vehicle you no longer have.

Quick Facts
  • California updated laws to minimize the cost of gap coverage.

  • Lenders aren’t allowed to offer financial incentives to purchase gap policies.

  • Gap policies provide coverage only if you owe more than the value of your car when it’s totaled.

What’s gap insurance, and how does it work?

Gap insurance is a type of optional coverage that stands for “guaranteed asset protection.”[1] One downside of purchasing a brand-new vehicle is that it depreciates immediately. The purpose of a gap insurance policy is to cover the difference between the actual cash value of your vehicle and your loan balance. Gap policies only apply if your vehicle is totaled. They don’t cover repairs.

For example, if you total your vehicle worth $15,000, and your loan balance is $16,500, the gap insurance policy will pay the extra $1,500 to cover the remaining balance. You can generally purchase a gap policy through a car dealership or a separate company.

A gap insurance policy could be a good idea if you made a smaller down payment, have an extended financing period, or are rolling over negative equity from a previous car purchase.

Find Cheap Gap Insurance in California

Check quotes from top insurance companies

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualAllstate

What gap insurance covers in California

In 2022, the California state government passed a law tightening regulations on gap coverage.[2] The state now requires insurance companies to ensure customers know that purchasing gap insurance policies is optional. California has also taken steps to minimize the purchase of gap policies by customers who wouldn’t likely be able to use them if their newer vehicles were totaled.

The state also requires insurance companies to cap the gap waiver price at 4% of the car’s financed amount. Further, lenders and car dealerships can’t offer financial incentives for purchasing a gap policy.

Gap insurance vs. full coverage

Full-coverage insurance protects drivers against liability and offers additional protections to cover damage to your vehicle if you’re in a car accident. Full-coverage policies typically include comprehensive and collision coverages as well as liability protection.

In California, full coverage has increased minimum limits of $100,000 per person and $300,000 per accident for bodily injury, $50,000 for property damage, and $30,000 per person and $60,000 per accident for uninsured/underinsured motorist coverage.[3]

Full coverage will offer financial protection for your property, no matter who’s at fault. Full-coverage policies don’t typically include gap insurance.

Good to Know

Whether you have a full-coverage policy or liability-only insurance, you should consider paying for a gap policy if you wouldn’t be able to afford the loss of your car. While full coverage will pay the total value of your vehicle if it’s totaled, you may have an auto loan larger than the value of your car. This is where gap insurance can help.

Who needs gap insurance in California?

The Golden State doesn’t require drivers to carry gap insurance. In 2022, the state introduced a new law that requires insurers to inform consumers that it’s an optional insurance product. In addition, insurance companies and financial institutions can’t sell unusable gap policies (gap coverage on vehicles that won’t depreciate quickly enough to require additional coverage).

A gap insurance policy could make sense if you:

  • Made a small (or no) down payment

  • Are leasing a new vehicle

  • Purchased a new car (even with a larger down payment)

  • Have negative trade-in equity on a previous purchase

On the other hand, you may not need to purchase gap insurance if you made a sizable down payment on a used vehicle, qualify for low interest rates, or plan to pay your car off in five years or less.

Your Next Insurance Policy Is Waiting

Review quotes from 100+ top insurance companies

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualAllstate

How to buy gap insurance in California

California drivers have a few options for purchasing a gap policy. You can buy coverage through your insurance company, a stand-alone gap coverage provider, a car dealership, or a lender. Your car dealership or lender may also offer a gap policy at the time of purchase.

You should talk to your insurance company when purchasing your vehicle to see if it provides a more affordable gap policy.

Best gap insurance companies in California

Although some major insurance companies offer gap protection, purchasing a gap product directly from the car dealership or your lender is more common. If you want gap coverage through your insurer, here are three of your best choices.

Allstate

Compare personalized, real-time quotes
User Reviews
3.1
IQ Score
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.
8.9/10
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$171/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$341/mo

Although Allstate’s average monthly rates are higher than some others, it’s a stable company with a fair reputation. Allstate offers several discounts, including new car discounts and multi-policy discounts that could help you save money.

Pros
  • Well-established with superior ratings from A.M. Best

  • Pay-per-mile option available

Cons
  • Low customer satisfaction

  • Rates are merely average compared to other insurers

Read more driver reviews of Allstate
Howard - October 29, 2024
Verified

They Have You By The Short Hairs

I was on a three-lane highway in heavy traffic and couldn't avoid a piece of metal in my lane. I couldn't swerve or I would have hit other cars. Allstate said the accident was the driver's fault and then doubled my insurance cost.

Hugh - October 29, 2024
Verified

Actual Crash Damages vs. Damages Quoted Over the Phone

There were problems getting the correct amount paid out when I made a claim. I had to escalate the issue to the Senior Vice President to get a proper settlement when a deer hit my truck. There was a $5000 difference between what was paid out when the estimator assessed the value of damage to my truck and the actual estimate done by a local car dealership. The Senior Vice President agreed that the amount of damage done was the amount quoted by the local car dealership.

Miriam - October 29, 2024
Verified

Best Overall

Check around before choosing. Allstate has been my choice for years.

Dairyland

Compare personalized, real-time quotes
User Reviews
3.0
IQ Score
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.
7.0/10
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$87/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$231/mo

Dairyland has lower rates than many other major insurers. The company also has excellent reviews from independent websites and an A+ financial strength rating from AM Best.

Pros
  • Many positive customer reviews

  • Provides coverage to drivers who may not be able to get it elsewhere

Cons
  • More complaints than expected with the NAIC

  • Rates tend to be higher than competitors

Read more driver reviews of Dairyland
Doris - October 29, 2024
Verified

They Keep Raising My Rates

They are okay.

Megan - October 28, 2024
Verified

Average

I was treated poorly when I was involved in an accident.

Ray - October 28, 2024
Verified

Meh

If you're looking for another policy, consider this one. I've tried to sign in with my policy and have never been able to, but I stick with it because the price is reasonable.

Travelers

Compare personalized, real-time quotes
User Reviews
3.4
IQ Score
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.
9.0/10
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$200/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$399/mo

Travelers is a good option for drivers who need affordable coverage and multiple discount options. Although Travelers charges the highest rates of these three options, its wide range of discounts makes saving on your policy easier.

Pros
  • Accident forgiveness available

  • Robust coverage selections and discount offerings

Cons
  • Rideshare coverage only available in Colorado and Illinois

  • High number of negative customer reviews with the Better Business Bureau

Read more driver reviews of Travelers
Vicki - October 27, 2024
Verified

Good but Costly

I had a great experience with Travelers and would still be with them, but I got a better rate with another company.

Nancy - October 23, 2024
Verified

Not Great by Any Means

Be careful when you submit a claim! They actually owe me $1,000 from five years ago and I still haven't received it.

Birdie - October 21, 2024
Verified

Expensive

I've never needed any claims for over 40 years, have no tickets, and an excellent credit score, yet my rates increased by 50%.
  • Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page.

    The car insurance data includes coverage analysis and details on drivers’ vehicles, driving records, and demographic information. Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.

    With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums. The data included on this page represent averages across driver ages, genders, credit scores, and driver profiles for California drivers.

Gap insurance in California FAQs

Insurance products can be tricky to understand. Here are a few of the most popular questions and answers about instances when you might need gap insurance.

  • Does California require gap insurance?

    No. Gap insurance is optional in California. California law requires dealers and lenders to inform customers that purchasing a gap policy is optional. Lenders and dealers can’t offer special financing to encourage buying a gap policy either.

  • Is gap insurance in California a good idea?

    Gap insurance may be a good option if you have longer repayment terms, made a small down payment, or have negative equity. Gap coverage can also offer financial peace of mind if your expensive new car is totaled in an accident.

  • Is gap insurance refundable in California?

    Sometimes. Recent state law changes require the gap insurance provider to inform you about prorated refund totals within 60 business days. If you pay your gap policy monthly, you may not have any prorated funds to refund.

  • What is the max gap insurance price in California?

    California law requires gap protection for at least 70% of the vehicle value and caps the cost of gap insurance at 4% of the total financed amount.

Sources

  1. Insurance Information Institute. "What is gap insurance?."
  2. Senate Judiciary Committee. "Motor vehicle conditional sale contracts: guaranteed asset protection waivers."
  3. California Department of Insurance. "Automobile Coverage Limits."
Angela Brown
Angela Brown

Angela Brown is a freelance writer with 17 years of professional writing and editing experience.
She specializes in finance, real estate, and insurance content. Angela uses her experience to
create easy-to-understand content that helps consumers understand tough topics better. When
she’s not working, she enjoys spending time with her family and planning vacations.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

Featured in

media logomedia logomedia logomedia logo

Compare Car Insurance Quotes Instantly

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualAllstate

Latest Articles

View all