1. What is Gap Insurance?

Gap insurance covers the difference between what you owe on your auto loan and the car's actual cash value (ACV) if it's totaled or stolen. This is particularly important in California where depreciation can quickly outpace loan repayment.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Loan \) — Remaining balance on your auto loan
• \( ACV \) — Actual cash value of your vehicle at time of loss

Explanation: The calculation shows how much you might owe if your car is totaled and regular insurance only covers the ACV.

3. Importance of Gap Calculation

Details: Calculating potential gap helps determine if gap insurance is needed. This is especially important for new cars, long-term loans, or low down payments where depreciation outpaces loan repayment.

4. Using the Calculator

Tips: Enter your current loan balance and estimated ACV (check Kelley Blue Book or similar sources for ACV estimates). All values must be valid (positive numbers).

5. Frequently Asked Questions (FAQ)

Q1: Who needs gap insurance in California?
A: Those with new cars, leases, long loans (60+ months), or small down payments (less than 20%) should consider gap insurance.

Q2: How is ACV determined?
A: Insurers determine ACV based on your car's make, model, year, mileage, condition, and local market prices.

Q3: Does gap insurance cover my deductible?
A: Standard gap insurance doesn't cover deductibles, but some policies offer "gap plus" that includes deductible coverage.

Q4: Is gap insurance required in California?
A: No, but lenders often require it for leased vehicles. It's optional for purchased vehicles but highly recommended in many cases.

Q5: Where can I buy gap insurance?
A: Available through auto insurers, dealerships (often more expensive), or specialty gap insurance providers.