California is one state that allows for GAP insurance to be purchased on vehicles that are financed. GAP insurance is beneficial when the value of a vehicle, new or used, depreciates while you still own money on the loan or lease. GAP insurance is optional and thus can be offered to a car owner but the state does not mandate it to be offered or purchased.

While GAP insurance is wise to have if you owe more on a vehicle then the actual cash value you would be paid out in an insurance settlement, normally neither a dealership nor lien holder will require you to have it either. It should be your choice if you want this extra coverage.

California does have a new law establishing a Car Buyer’s Bill of Rights. This law took effect July 1, 2006, and affects retail vehicle sales handled by licensed car dealers in California. The new law applies to motor vehicles bought in California from a dealer for personal, family or household use, including cars, minivans, SUVs and trucks. Some provisions in the law cover only used cars, while others cover new and used cars.

The new law does not cover private sales between individuals, leased autos, vehicles purchased or registered in another state, commercial vehicles, recreational vehicles and motorcycles. Some highlights of this new law are listed below.

According to this new law for new and used car buyers:

• Dealers must provide an itemized price list for items such as warranties and insurance, etc., if the items are being financed.
• Dealer compensation from an institution financing the purchase of a vehicle is limited to no more than 2 percent for a loan term over 60 months and 2.5 percent for a loan term of 60 months or less.
• Dealers must provide buyers with their credit score and an explanation of how it is used.

For used car buyers only:

• A used car buyer may obtain a two-day sales contract cancellation option.
• Used cars advertised as “certified” must meet specific requirements.

So as part of this law a new or used car dealer must inform you if insurance, such as GAP, is part of what is included in your financing agreement but the law does not require the dealer to offer you this coverage or require you to have it in order to drive off the dealer's lot. Perhaps some financial institutions will want you to have GAP as part of your insurance coverages on the car you are purchasing. If this is the case your loan or lease papers should note this.

For an affordable quote on full coverage and GAP insurance for California, go here. If you want to read more about this new California Car Buyer’s Bill of Rights, go to the CA Department of Motor Vehicles site.

For motorcycle insurance follow this link or contact Safeco at 1-800-936-0356.