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.

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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.

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Updated December 25, 2024

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Cheapest recent car insurance quotes in California

Drivers using Insurify have found quotes as cheap as $39/mo for liability only and $81/mo for full coverage in California.

*Quotes generated for Insurify users from California within the last 10 days. Last updated on December 25, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

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 December 25, 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 December 25, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

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 December 25, 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.

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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

Allstate logo
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.
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.
$169/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.
$340/mo
4.0
Best choiceBased on 5,771 verified guest reviews and ratings
How drivers feel about Allstate

Drivers appreciate the initial pricing and overall service but dislike the frequent rate increases and misleading pricing tactics.

AI-generated from the text of verified reviews collected by Insurify
Best For
Accident forgiveness
Wide availability
Cheap rates
How drivers feel about Allstate

Drivers appreciate the initial pricing and overall service but dislike the frequent rate increases and misleading pricing tactics.

AI-generated from the text of verified reviews collected by Insurify
Best For
Accident forgiveness
Wide availability
Cheap rates
Reviews (3,147)

Jean

December 24, 2024

Verified Review

Extremely Disappointed

I was very disappointed when they raised my rate by $160.00 because I bought a new home. They said it was based on zip code, which I find hard to believe.

Robert

December 24, 2024

Verified Review

High Price for Low Mileage Driving Seniors

Allstate is a good company, but they do not provide a significant enough discount for seniors who drive under 5000 miles a year. This is considering that the mileage is for two vehicles in total.

David

December 23, 2024

Verified Review

Very Unhappy with How My Account Was Handled

I called Progressive five months ago to cancel my policy, but they still withdrew over $1000 from my account. When I contacted them, they told me I'd have to call someone else. Despite promises of return calls, there were none for weeks. I finally got a hold of someone last week, and she said they don't acknowledge insurance companies' calls to cancel policies. She admitted knowing about my cancellation request, yet they didn't cancel the policy and took my money anyway. I plan to forward a letter like this to the Florida Insurance Commissioner.
See all Allstate reviews
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
833
NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
0.94
A.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

Dairyland logo
User Reviews
3.6
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.
$92/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.
$239/mo
3.6
A solid optionBased on 254 verified guest reviews and ratings
How drivers feel about Dairyland

Drivers appreciate the low prices, honesty, and good customer service but dislike the frequent rate increases.

AI-generated from the text of verified reviews collected by Insurify
Best For
Hard-to-insure drivers
Customer satisfaction
RV and motorcycle coverage
How drivers feel about Dairyland

Drivers appreciate the low prices, honesty, and good customer service but dislike the frequent rate increases.

AI-generated from the text of verified reviews collected by Insurify
Best For
Hard-to-insure drivers
Customer satisfaction
RV and motorcycle coverage
Reviews (135)

Colani

December 17, 2024

Verified Review

Policy Change

Cheaper policies.

Patrice

November 28, 2024

Verified Review

Awesome Customer Service!

Awesome.

Oliver

November 5, 2024

Verified Review

Review Option

The insurance premium is too high without much coverage.
See all Dairyland reviews
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
NR
NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
1.61
A.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

Cons
  • More complaints than expected with the NAIC

  • Rates tend to be higher than competitors

Travelers

Travelers logo
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.
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.
$198/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.
$398/mo
4.7
Best choiceBased on 773 verified guest reviews and ratings
How drivers feel about Travelers

Drivers appreciate the lowest prices, excellent service, and responsive call centers but dislike the rising premiums and poor claims handling.

AI-generated from the text of verified reviews collected by Insurify
Best For
Numerous discounts
Gap insurance
Rideshare coverage
How drivers feel about Travelers

Drivers appreciate the lowest prices, excellent service, and responsive call centers but dislike the rising premiums and poor claims handling.

AI-generated from the text of verified reviews collected by Insurify
Best For
Numerous discounts
Gap insurance
Rideshare coverage
Reviews (400)

Sheri

December 24, 2024

Verified Review

Pay A Bit More for Peace of Mind

We have full coverage, including a glass policy and roadside assistance. We had a not-at-fault collision out of state. Travelers handled the claim with the other driver's insurance. Everything went smoothly. My policy amount has increased each year, as have others. I could not find a cheaper policy with the coverage I want.

Larry

December 14, 2024

Verified Review

Bye

It's very hard to file a claim. You have to take all kinds of pictures.

Joan

December 13, 2024

Verified Review

Not Recommended: Travelers Insurance

Their prices are outrageous. I have been with them for 10 years without any accidents. The customer service representatives can barely speak English and don't offer solutions.
See all Travelers reviews
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
829
NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
0.94
A.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.

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.

Angela has been a contributor at Insurify since October 2022.

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

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