Gap Insurance in California (2026)
Purchasing gap insurance could protect many drivers from paying out of pocket if their car is totaled.
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Written byAngela Brown
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Angela BrownFreelance Personal Finance Writer
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.
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Chris SchaferDeputy Managing Editor, News and Marketing Content
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7+ years in business and financial services content
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Reviewed byJohn Leach
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John LeachLicensed P&C Agent, Chief Copy Editor
Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
John is Insurify’s Chief Copy Editor, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.
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Table of contents
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.
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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.
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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 in California.
Allstate
| User Reviews | 3.8 |
|---|---|
| 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. | $115/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. | $259/mo |
3.8
A solid option in CaliforniaBased on 9,696 verified driver reviews and ratings
How drivers feel about Allstate
Drivers appreciate the friendly customer service and efficient claims processing, but many find the rates too high and experience unexpected price increases. Some also report poor communication from agents.
AI-generated from the text of verified reviews collected by Insurify
Best in California for
Accident forgiveness
Wide availability
Cheap rates
How drivers feel about Allstate
Drivers appreciate the friendly customer service and efficient claims processing, but many find the rates too high and experience unexpected price increases. Some also report poor communication from agents.
AI-generated from the text of verified reviews collected by Insurify
Best in California for
Accident forgiveness
Wide availability
Cheap rates
Showing 46 reviews from California drivers - See all 4,311 Allstate reviews
Amy
Verified Review
Disappointing
Reviewed in California on March 13, 2026
It used to be worth spending more because I felt like I got the support and customer service I needed. Now it’s a lot of doing things yourself and nearly impossible to actually get to speak to your agent.
Stephen
Verified Review
Allstate Charged More Than Double Geico for Same Coverages
Reviewed in California on March 2, 2026
I left Allstate to go to Geico.
Ronald
Verified Review
Is anyone better?
Reviewed in California on March 1, 2026
They have been cheaper than most and the coverages are better. I would like to know why my policy is raised and not lowered every year, but it is still cheaper with better coverages. I don't have any tickets, DUIs, or accidents.
Ivan
Verified Review
Do Not Use Allstate
Reviewed in California on February 24, 2026
Allstate is not a good insurance company. I would not recommend them to anyone as they keep raising their prices every year, and by a lot. Not just mine, but everyone I know who uses them has experienced this.
Eugene
Verified Review
Cost is Too High
Reviewed in California on February 15, 2026
The price keeps going up even though I have had no accidents.
Bradley
Verified Review
Priced out of my policy
Reviewed in California on February 9, 2026
Way too expensive. My cars get older, depreciate, and my policy goes up?
Sonia
Verified Review
Poor Service After Five Years
Reviewed in California on January 27, 2026
I wanted to lower my payment, but they wouldn't work with me even though I've been with them for five years.
Patricia J
Verified Review
Interesting
Reviewed in California on January 24, 2026
My agent is really nice and got me what I needed. I pay a lot less.
Michael
Verified Review
Excellent
Reviewed in California on January 18, 2026
It is wonderful knowing my wife and I are in good hands. Thank you, Allstate Insurance Group.
…
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
636NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
1.02A.M. Best
A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).
A-Why we picked this company
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
Ample opportunities for bundling discount
Offers a pay-per-mile option
A+ (Superior) financial strength rating from AM Best
Cons
Low customer satisfaction
Rates are merely average compared to other insurers
Below-average rank for customer satisfaction in many regions, according to J.D. Power’s 2024 U.S. Auto Insurance Study
Dairyland
| User Reviews | 4.0 |
|---|---|
| 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. | 7.7 /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. | $95/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. | $232/mo |
4.0
Best choice in CaliforniaBased on 373 verified driver reviews and ratings
How drivers feel about Dairyland
Drivers appreciate the affordable initial rates and the company’s willingness to insure when others won’t. But they dislike the frequent and unexplained rate increases, and some report poor customer service experiences.
AI-generated from the text of verified reviews collected by Insurify
Best in California for
Hard-to-insure drivers
Customer satisfaction
RV and motorcycle coverage
How drivers feel about Dairyland
Drivers appreciate the affordable initial rates and the company’s willingness to insure when others won’t. But they dislike the frequent and unexplained rate increases, and some report poor customer service experiences.
AI-generated from the text of verified reviews collected by Insurify
Best in California for
Hard-to-insure drivers
Customer satisfaction
RV and motorcycle coverage
Showing recent national reviews - See all 179 Dairyland reviews
Christopher
Verified Review
Dairyland Insurance Review
Reviewed in South Dakota on March 8, 2026
Affordable. No problems with them at all.
Daniel
Verified Purchase
I would recommend
Reviewed in Washington on January 6, 2026
No issues, haven't had a reason to contact them.
Michel
Verified Review
My 2 Cents
Reviewed in Nevada on January 5, 2026
Don't buy. They raise the rates once you sign up after 6 months.
…
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
NRNAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
1.49A.M. Best
A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).
A+Why we picked this company
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
Offers non-owner car insurance
Cons
More complaints than expected with the NAIC
Rates tend to be higher than competitors
Few discount options
Travelers
| User Reviews | 4.7 |
|---|---|
| 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. | 8.5 /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. | $134/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. | $303/mo |
4.7
Best choice in CaliforniaBased on 1,304 verified driver reviews and ratings
How drivers feel about Travelers
Customers appreciate the insurer’s communicative customer service and efficient claims process. But they’re dissatisfied with the consistent and sometimes significant price increases, even for those with clean driving records.
AI-generated from the text of verified reviews collected by Insurify
Best in California for
Numerous discounts
Gap insurance
Rideshare coverage
How drivers feel about Travelers
Customers appreciate the insurer’s communicative customer service and efficient claims process. But they’re dissatisfied with the consistent and sometimes significant price increases, even for those with clean driving records.
AI-generated from the text of verified reviews collected by Insurify
Best in California for
Numerous discounts
Gap insurance
Rideshare coverage
Showing 9 reviews from California drivers - See all 568 Travelers reviews
Keith
Verified Review
Very good service, however, they raise your premium substantially in subsequent years.
Reviewed in California on February 2, 2026
By almost all criteria, they do a very good job. However, they just raised my premium by 40%.
Judy
Verified Review
The minute I asked to check rates with other insurers, Travelers placed a ticket on my account hoping
Reviewed in California on January 30, 2026
Recently, I asked them for a discount on my car insurance and they would not give one. So I asked them if I could shop around and they said yes. I had a very small fender bender a few months back and I had 51% responsibility and the other person had 49% responsibility because she parked inside my lane.
Linda
Verified Review
Not good
Reviewed in California on January 14, 2026
My car was in and out of two different shops for two months! I lost my $30/day car rental discount after the first month. I think that discount should be adjusted upwards. There are very few, if any, cars that I could have rented for $30 per day! During the in-and-out of the shop process in the second month, I was finally able to get a car rental for the last repair that was necessary after I expressed my frustration with their policy. The agent I worked with had to request the exemption through her supervisor, who did approve it eventually. My overall experience with this process was frustrating, and I would not recommend these particular agents to others.
Mary
Verified Review
High rates/no claims
Reviewed in California on January 9, 2026
My main concern is the cost I now pay. As a result, I have been searching for comparable insurance. A number of companies’ rates are at least $500 lower. As I am on a limited income, I am seriously considering transferring. I have been with Travelers for nearly 10 years with no claims.
Jeff
Verified Review
Nothing bad to say
Reviewed in California on December 5, 2025
I feel like they should have looked into ways to save us money.
Robert
Verified Review
Travelers is a good company
Reviewed in California on July 11, 2025
Solid service and coverage with fine service. Nothing to be concerned about.
Jesus
Verified Review
Excellent
Reviewed in California on June 23, 2025
No bad experiences with Travelers.
Irwin
Verified Review
Need Assistance with Accessing Declaration Page
Reviewed in California on April 14, 2025
I am 81 years old with limited technical training. I requested a copy of my policy declaration page and received a reply dated 4/4/2025, advising me to go to 'My Travellers Account', under the policy tab via policy documents. However, when I tried, I was unable to find anything about policy documents to check. Since I am technically challenged, I find it to be like 'jumping through hoops'.
Bob
Verified Review
Travelers - Solid Coverage
Reviewed in California on April 5, 2025
They are supportive and reliable.
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
616NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
0A.M. Best
A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).
A++Why we picked this company
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
Offers discount for hybrid and electric cars
A++ (Superior) financial strength rating from AM Best
Cons
Rideshare coverage not available in all states
High number of negative customer reviews with the Better Business Bureau
Higher-than-average number of complaints with the National Association of Insurance Commissioners
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.
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Sources
- Insurance Information Institute. "What is gap insurance?."
- Senate Judiciary Committee. "Motor vehicle conditional sale contracts: guaranteed asset protection waivers."
- California Department of Insurance. "Automobile Coverage Limits."
)
Angela BrownFreelance Personal Finance Writer
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
Angela is an insurance and personal finance expert who uses her experience to create content that helps readers understand important and complex topics.
Chris SchaferDeputy Managing Editor, News and Marketing Content
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
John LeachLicensed P&C Agent, Chief Copy Editor
Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
John is Insurify’s Chief Copy Editor, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.
Featured in