Leasing a car is a popular alternative to buying a car. It allows you to drive a new car without committing to owning it for an extended period. Leasing a car typically involves a lower upfront cost and lower monthly payments than financing a car purchase. However, when it comes to car insurance, leasing a car requires a different approach.
Understanding Leased Car Insurance
Lease agreements often require you to have a certain amount of car insurance coverage. The required coverage may be higher than what your state legally requires for car insurance. The reason for this is to protect the leasing company, as the leased car is still their property. If you get into an accident and the car is damaged, the insurance will cover the repair or replacement costs.
Leasing a car typically requires you to have comprehensive insurance coverage in addition to liability insurance. Comprehensive insurance covers damages caused by events such as theft, vandalism, and natural disasters. It’s important to have comprehensive coverage because you’re responsible for the car’s condition at the end of the lease term. If the car has any damage, you may be charged for the repairs or the difference in value.
Liability Insurance
Liability insurance is the most basic car insurance coverage required by law. Liability insurance covers damages and injuries you may cause to other drivers, passengers, or property. The required liability coverage for a leased car may be higher than your state’s minimum requirement. The reason for this is that leased cars often have a higher value than other cars, and therefore require more coverage.
In addition to liability insurance, some leasing companies may require you to have uninsured/underinsured motorist coverage. This coverage protects you in case you’re in an accident with an uninsured or underinsured driver who is at fault. If you’re involved in an accident with a driver who doesn’t carry enough insurance, this coverage will pay for any excess expenses.
Comprehensive Insurance
Comprehensive insurance is an optional coverage that covers damages to your leased car in case of events outside of your control, such as theft, vandalism, or natural disasters. Comprehensive coverage is required when you lease a car because the leasing company wants to protect their property. Without comprehensive coverage, you would be responsible for any damages to the car that occur outside of an accident.
How Much Coverage Do You Need?
When it comes to leased car insurance, you may be required to have more coverage than you normally would. The amount of coverage you need depends on the leasing company’s requirements, as well as your personal preferences. Here are some examples of required coverage for leased cars:
Required Coverage |
Description |
|---|---|
Liability insurance |
Required by law to cover damages and injuries you may cause to others. |
Collision insurance |
Covers damages to your leased car in case of an accident. |
Comprehensive insurance |
Covers damages to your leased car in case of events outside of an accident. |
Gap insurance |
Covers the difference between what you owe on your lease and what your insurance will pay in case of a total loss. |
Uninsured/underinsured motorist coverage |
Covers you in case of an accident with a driver who is at fault but doesn’t carry enough insurance. |
Check with your leasing company to see what their specific requirements are, as they may vary. You may also want to consider adding additional coverage, such as roadside assistance or rental car reimbursement, to your leased car insurance policy.
FAQs
What happens if I get into an accident with a leased car?
If you get into an accident with a leased car, your insurance will cover the damages up to your policy limits. If the damages exceed your policy limits, you will be responsible for the difference. It’s important to notify both your insurance company and the leasing company immediately after the accident.
Can I choose my own insurance company for a leased car?
Yes, you can choose your own insurance company for a leased car. However, the leasing company may have specific requirements for the amount and type of coverage you need to have. Make sure to check with the leasing company before purchasing car insurance.
What is gap insurance?
Gap insurance is a type of insurance that covers the difference between what you owe on your leased car and what your insurance will pay in case of a total loss. Gap insurance is important because the value of a car decreases quickly after it’s driven off the lot. If your leased car is totaled or stolen, you may owe more on the lease than the insurance will pay. Gap insurance will cover that difference.
Can I change my leased car insurance coverage during the lease term?
Yes, you can change your leased car insurance coverage during the lease term. However, you may need to notify the leasing company of any changes to your coverage. Changing your coverage may also affect your monthly payments.
What happens if I return a leased car with damages?
If you return a leased car with damages, you may be charged for the repairs or the difference in value. That’s why it’s important to have comprehensive insurance coverage, which covers damages to the car from events outside of an accident. Make sure to thoroughly inspect the car before returning it and fix any damages before the lease term is up.
Can I buy my leased car insurance after the lease term is up?
Yes, you can buy your leased car insurance after the lease term is up. However, you may need to switch to a different type of car insurance, as leased car insurance typically requires more coverage than regular car insurance. Make sure to check with your insurance company to see what type of coverage is best for you and your car.
Conclusion
Leasing a car is a popular alternative to buying a car. However, when it comes to car insurance, leasing a car requires a different approach. Leased car insurance typically requires more coverage than regular car insurance to protect the leasing company’s property. Check with your leasing company to see what their specific requirements are, and consider adding additional coverage to your policy. With the right insurance coverage, you can drive your leased car with peace of mind and avoid any unexpected expenses at the end of the lease term.