California gap insurance: Everything you need to know

How much is gap insurance in California?

On average, gap insurance in California costs $2,814 a year, but rates vary by company. The cost of your vehicle also affects gap rates. Expensive or luxurious cars tend to depreciate faster than standard vehicles, meaning gap coverage would have to pay more, which increases coverage rates.

Cheapest gap insurance companies in California

The cheapest gap insurance in California is offered by Progressive, with an average yearly cost of $2,229. Not all car insurance companies provide gap coverage, and rates can vary significantly among carriers.

Take a look at the table below to see the cheapest California insurance companies for gap coverage.

Company	Auto insurance rates with gap premium	Gap premium
Progressive	$2,229	$30
Mercury Insurance	$2,347	$45
Allstate	$2,893	$103
Travelers	$2,897	$75
The Hartford	$2,953	$126
Farmers	$3,023	$142
Nationwide	$3,151	$93

Read our methodology

Average gap insurance cost in California by city

Los Angeles has the highest gap insurance rates at an average of $3,651 a year, while Portola offers the lowest at an average of $2,228 per year. Where you live in California affects your insurance rates. Cities with higher crime and theft have higher insurance costs because your vehicle is at a greater risk of being damaged or stolen.

The table below lists the average gap insurance rates by city in California.

City	Auto insurance rates with gap premium	Gap premium
Portola	$2,228	$77
Temecula	$2,450	$81
San Jose	$2,491	$83
Irvine	$2,520	$78
San Diego	$2,521	$83
Fresno	$2,631	$86
Sausalito	$2,682	$93
Hayward	$2,771	$98
Vallejo	$2,809	$99
Anaheim	$2,813	$90

Read our methodology

How much is gap insurance in California by age group?

Gap insurance rates are higher for younger drivers because they have less experience and are more likely to take risks while driving, increasing the odds of a total loss. As drivers get older, their rates go down. For example, an 18-year-old pays an average of $7,270 per year, while a 25-year-old pays around $3,445 annually.

The table below lists the average gap insurance rates in California based on age.

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$7,270	$233
Young adult	$3,445	$118
Adult	$2,814	$94
Senior	$2,629	$86

Read our methodology

How does gap insurance work in California?

When you buy or lease a new car, depreciationDepreciation is the decrease in your car's value over time due to wear and tear, age and mileage. Depreciation is used to determine the actual cash value of a vehicle in the event of a total loss. can quickly cause you to owe more than the car is worth. If your car is totaled, the insurance company will only pay out the car's actual cash value, which may leave you owing on the loan. That's where gap insurance comes in. If your vehicle is totaled or stolen, gap insurance covers the difference between your car's value and the loan payoff.

"Gap is designed for people that take long-term loans and/or roll taxes, service plans, or warranties into their loan," said Zack Pope, agency manager at David Pope Insurance in Missouri. "Most gap coverages only go a certain percent over market value to pay off a loan for a totaled vehicle (typically 25%). It costs significantly less money to get gap through your insurance than to purchase it from the dealership."

For example, let's say you have a $40,000 car loan, but your vehicle's actual cash value is only $35,000. If the car is stolen, your insurance company will reimburse you $35,000, minus your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim.. Gap insurance would cover the remaining $5,000 that you still owe on your loan. Without gap insurance, you'd be responsible for paying this difference out of pocket.

You can drop gap coverage once your loan balance is below your car's value. While you can cancel gap insurance anytime, you may not be able to add it later. Most insurers require you to add gap coverage soon after buying a car.

Where to buy gap insurance in California

Many insurance companies, including major carriers, offer gap insurance in California. It's relatively easy to add coverage to your current auto insurance policy.

Adding gap coverage to your auto insurance policy is usually the most cost-effective option. While you can purchase gap coverage from most car dealers and lenders, those policies tend to be more expensive, making it a less attractive option.

Methodology

We gathered car insurance rates with and without gap insurance through our data partner, Quadrant Information Services.

Averages are annual and based on our full coverage data set. This data set is based on:

Bodily injury liability of $100,000 per person and $300,000 per incident
Property damage liability of $100,000 per incident
Comprehensive and collision deductibles of $500
40-year-old driver
Honda Accord LX
Good credit
A clean driving record
12-mile commute, 10,000 annual mileage

To show the cost of gap insurance, we have compared rates with gap insurance added to the averages without gap insurance, and the difference is shown as the annual cost of gap insurance.

Rates are based on an analysis of over 5 million data points in all 50 states and Washington, D.C. from 138 companies.

California gap insurance: FAQs

Is gap insurance required in California?

Gap insurance isn't required by law in California, but your lender may require you to have the coverage.

Who should buy gap insurance in California?

If you have a car loan or lease in California, you might need gap insurance. If you made a small down payment, you could quickly owe more than your car is worth since vehicles lose value faster than you can pay the loan. In this case, gap insurance can be a smart choice.

You don't need gap insurance if you own your car or made a large down payment to ensure that you owe less than the car's value at the start of your loan.

What is standalone gap insurance in California?

Standalone gap insurance is a separate policy, not a part of your car insurance. You can buy gap insurance from your lender or a private company as an independent policy.

Does gap insurance cover leased cars in California?

California gap insurance covers leased cars when the driver owes more than the vehicle's current market value. You can drop gap coverage once your car is worth more than what is owed.