California Drivers are Bridging the Gap with GAP Car Insurance

California Drivers are Bridging the GAP with GAP Car Insurance

Protect your new car the minute it drives off the lot.

When you're talking about bridging the gap in California there are a lot fo things that come to mind. The generation gap, for example, between the old men sitting on their porch and the young teens walking around sporting gang tattoos or going goth. You might be talking about bridging the gap between west coast relaxation and the east coast insistence on keeping a schedule for everything from business to breakfast.

There are a lot of gaps that need to be bridged in California, but the gap between the price of your car loan and the value of your car after you drive it off the dealer's lot is the only one that can be bridged with GAP car insurance.

The 411 on GAP Car Insurance

Did you know that the minute your car puts one tiny wheel on the pavement outside of the dealership its value can depreciate by as much as 20%? Probably not. That's one of those things that lenders and dealers tend to keep quiet when they're working out the paperwork!

While watching your car depreciate with every turn of the tire is annoying, it has more sinister implications. What's going to happen if two weeks after you buy your car you're driving down Route 67 (statistically proven to be one of the most dangerous highways in the state in terms of accident risk) not paying attention and you get in an accident with a car that's bigger, badder and more prepared than yours? Your car's going to be totaled!

Here's where depreciation comes around and bares its ugly, snarling head. Your insurance company doesn't care how much you paid for the car in the first place. They're only going to cut you a check for what the car's worth now. Since you probably haven't even made your first loan payment yet you still owe the full value of the loan for a car you can't drive and is now worth less than 80% of what you paid for it.

Guess who gets to hold the bill for the other 20-30%? Yep. That would be you.

At first glance that doesn't sound so bad, but let's think about this for a second. If you took out a loan for $15,000 to buy a used car in good condition from Calabasas you're going to be holding a bill for $3,000 worth of "balance" after your insurance company cuts you a $12,000 check. For most of us, that isn't pocket change! GAP car insurance covers the difference between the value of your car and the amount of money left on your loan.

California is one of many states that allows drivers to purchase GAP car insurance for almost any vehicle less than 8 years old. (Although, as always, that varies from company to company.) As long as your car is less than 8 years old (manufactured after 2001) you should be eligible for GAP coverage, allowing you to walk away from the accident with your head high, your bank account intact and a fighting chance at getting another car loan to buy a new vehicle.

GAP car insurance isn't required by the state, and it's not required at all if you don't have a lien on your car. Many lenders, however, will require you to buy GAP coverage as part of your loan agreement, knowing full well that many people's payment habits "fall off" when they're no longer driving their collateral. Check with your lender to see what their policy is as soon as possible, if you didn't at the time you signed for the loan.

GAP coverage might not be a legal requirement, but hey-the California highways aren't getting any safer. Disaster could strike at any time, so it's best to make sure you're covered with all the insurance protection your car can provide-from its first day at your house to its last.

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