UPDATED: Feb 29, 2012

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Written By: Melanie MussonReviewed By: Daniel WalkerUPDATED: Feb 29, 2012Fact Checked

Do you live in California, and have you recently purchased or are thinking about purchasing a new or used vehicle? You need to be sure that you are carrying the right amount of insurance coverage in order for your vehicle to be on the roads legally. But, you may also want to consider having additional coverage, such as the GAP insurance California drivers often have. Considering that you are driving on some of the most dangerous roads in the country, you are at a high risk of being in an accident. If your vehicle is totaled and you still owe money, this is the type of coverage that is going to look after you and keep you from ending up in the poor house.

What is GAP Insurance?

Gap coverage is exactly what it sounds like: it is there to fill the gap between what insurance companies traditionally pay out for totaled vehicles and what you actually owe on it or the cost to replace that vehicle. After all, since vehicles do depreciate in value very quickly, you could be in a lot of financial trouble if you end up having a serious accident before your vehicle is completely paid off. Just think about this: what would happen if you financed a vehicle, then ended up totaling it within a week? You have the entire loan to pay off, and your regular insurance is just not going to provide you with that much money, and where will you be then? Stuck with no vehicle, and a lot of money still owing.

GAP Insurance and Used Cars

If you live in the State of California and you want to purchase a used vehicle which you will have to finance, you can get GAP insurance. In fact, it can be extremely important to have this type of coverage, especially if you have a balance owing on the vehicle. Your regular insurance may not be enough to cover replacement costs if you are in a serious accident and anything that is not covered will be taken care of by GAP coverage.

Almost as soon as you buy any vehicle, the value of begins to depreciate, even if you are still paying on it. In fact, the moment a vehicle leaves the dealership, it can depreciate up to 20%. The GAP insurance California drivers often have is ideal in this type of situation. If your vehicle is stolen or damaged so badly you need to replace it, your GAP insurance will pay the difference between the value of the vehicle and the amount that is still owed on it. This means that you will be able to afford to replace your vehicle if necessary. Some insurers have restrictions in place, but you can find out about these when you are getting your GAP insurance quotes.

Why You Should Have GAP Coverage

If you are only carrying regular insurance coverage, you may not be able to afford to replace your vehicle if it is totaled in an accident. This is because your insurance is only going to pay the current Blue Book value of the vehicle. Because of the rate of depreciation, this could mean that you are going to get a lot less than it will actually cost to replace your vehicle, and you will have to come up with the balance on your own. You will still have to pay the balance owing on the vehicle that was totaled. For a lot of people, this just isn’t possible, especially in this tight economy when we all have to cut back on expenses as much as possible.

How Old Does Your Vehicle Have to Be?

You can’t get GAP insurance for just any old vehicle. In fact, if your vehicle is more than eight years old, this type of coverage will not be available to you. If your vehicle is not more than eight years, you should have no problem getting a good rate on this insurance. It is not required by the State of California that you have GAP coverage, even if you have financed your vehicle. This is not to say that your lender is not going to require that you have it. In fact, many lenders will not finance or lease a vehicle unless the driver carries this coverage.

What Else Should You Have for Insurance Coverage?

Obviously, you are going to have to have the minimum amount of insurance as required by the State of California. Collision and comprehensive coverage alone just won’t cut it. You are required to carry a minimum amount of liability insurance in the following amounts:

  • $15,000 for injury or death to one person in an accident where you are at fault
  • $30,000 for injury or death to more than one person in an accident where you are at fault
  • $5,000 for property damage resulting from an accident where you are at fault

This is just the minimum that is required by the state. If you can afford it, you really should consider having full coverage, so you are prepared no matter what happens. You never know when an accident is going to happen, but if you are fully insured, you know you won’t have to worry about money if you do get into a crash.

Getting the Best Insurance Rates

When it comes to getting the best rates for GAP insurance California drivers know that they have to shop around. You need to get quotes from many different insurers. After all, no two insurance companies are alike, and they all offer different products and rates. When you get quotes based on your insurance needs, you will have all of the information you need to make sure that you are getting the best rates. We can help. Go online today and take a few minutes to fill out a short form. You don’t need to provide any personal information. Just let us know about your insurance needs, and your zip code. We will take this information and use it to get you a number of free quotes. You are under no obligation to buy anything until you are ready.

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Written by Melanie Musson
Published Insurance Expert Melanie Musson

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Car Insurance Agent for 15 Years Daniel Walker