California Law Adds New GAP Insurance Limits

California Legislative Bill 2311 regulates the sale of Guaranteed Asset Protection (GAP) insurance. Here’s what we know about the bill signed into California law on September 13th.

New California Law Restricts GAP Sales

according to car news, the new California law does several things. Prohibits selling GAP on auto loans less than 70% of vehicle value or financing more than GAP covers and limits GAP insurance price to 4.% of loan amount.

The new bill is expected to prevent Californians from spending money on unnecessary add-on products related to vehicle financing, an already expensive purchase. The caps set on GAP’s prices are especially hard as the cost of cars and trucks continues to rise.

However, a recent paper by two economists (whose results were analyzed by a professor of finance at the University of Mississippi) found that participants surveyed in the 2020 University of Michigan survey were very satisfied with their purchase of GAP. I was. 90% of those surveyed said they thought the purchase was a good idea.

Reasons to purchase GAP Insurance

gap insurance This add-on product eliminates the need to pay the difference between the loan amount and the vehicle price in the event of an accident such as a total loss or theft. Cars depreciate quickly when you start owning them, so there is often a difference between the loan amount and the car’s value, especially for newer cars.

It is typically provided by the dealer’s finance and insurance manager, but can usually be purchased separately through your own insurance company or a third-party provider. GAP is usually an affordable way to protect yourself from out-of-pocket costs.

Savings for Californians

Apart from saving the price of GAP and restricting it from selling when it is beneficial to consumers, lenders can either report Occur. All other circumstances will be considered subject to prorated refunds.

All of this represents an overall savings for Californians purchasing add-on products at the point of sale. Whether or not you think GAP is in your best interest is up to you, but buying a car in California might make your choice a little easier and cost a little less.

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