GAP Insurance, or Guaranteed Asset Protection, fills the gap between the auto insurance company’s payout and the actual damages. Even though California requires all drivers to have car insurance, there are many instances when damages can be higher than a driver’s coverage limits. Other times, the driver who caused the accident may not have insurance at all. Having gap insurance is not required, but it can lessen your out-of-pocket expenses if you are involved in a car accident.
In California, the minimum policy insurance limit required is $15,000 for personal injury and $30,000 for personal injuries if multiple people are involved. The minimum limit for property damage is $5,000. Therefore, if a driver does not carry full coverage insurance, the chances of damages from a car accident exceeding policy limits are very likely.
The purpose of GAP insurance is to cover the difference between what’s owed to the lessor for a totaled vehicle and the fair market value that car insurance pays on a total loss. Most new cars lose a full 20 percent of their value within the first year. Depending on the vehicle, the price paid, and interest rates, the balance remaining can sometimes be more than the car’s actual value.
Where standard auto insurance policies only cover your vehicle’s actual cash value at the time of the accident, the gap insurance can provide the driver with the exact amount still owed on the car. Gap insurance may be more beneficial in accidents involving a new or leased car.
In California, the most typical auto-insurance policies include:
- Bodily injury liability
- Property damage liability
- Uninsured/underinsured motorist. Covers expenses if the at-fault party doesn’t have enough insurance to cover damages.
- Personal Injury Protection. Also referred to as PIP or no-fault. This type of coverage is provided as per-person or per-accident limits. It’s used to cover medical expenses, rehabilitation, disability, or loss of income caused by a car accident.
GAP insurance does provide restitution for bodily injury, emotional trauma, medical expenses, or other damages incurred from a car accident. GAP insurance’s primary purpose is to protect buyers from the cost of financing a new vehicle. GAP policies are only applicable to vehicle losses.
To find out what your particular Gap insurance covers, it is crucial to understand the details of your policy. For example, Gap insurance usually provides restitution for major damage or total loss. It usually doesn’t cover ordinary maintenance on a vehicle.
Involved in a Car Accident
In California, a person injured in a car accident has two years from the accident date to file a personal injury claim. Once this two-year time frame passes, the injured person is no longer entitled to collect injuries.
Understanding Options if Damages are Greater Than Insurance Coverage
The at-fault party’s policy limits do not bind you. If you are injured, you may seek compensation beyond the auto insurance policy limitations. Other options may include:
Identify Other Liable Parties
Sometimes, there may be more than one party responsible for the accident. If another party is also responsible for the accident, the injured party can recover damages from them.
Sue the Liable Party Beyond Their Insurance Coverage
If the at-fault party’s policy limits do not cover your damages, you have the right to sue the individual if their negligence caused your accident personally.
File a Claim Against Your Uninsured Motorist Policy
Contact a Skilled Attorney
Deciding on whether Gap insurance is the right decision for you depends on your financial circumstances. Speak to an experienced personal injury attorney at the Dan Rose Law Firm to help make the right decision for you.