Leasing a car has become a popular option for many people who want to drive a new car without committing to a long-term loan or paying the full cost upfront. Leasing a car can also be a good option for business owners. However, before you sign on the dotted line, it is important to understand the insurance requirements for leasing a car. In this article, we will explain everything you need to know about leasing car insurance.
Table of Contents
- Frequently Asked Questions
- Collision Insurance
- Comprehensive Insurance
- Gap Insurance
- Liability Insurance
- Personal Injury Protection Insurance
- Uninsured/Underinsured Motorist Insurance
Frequently Asked Questions
What is car insurance for a leased car?
Car insurance for a leased car is similar to insurance for a car you own, but there may be additional requirements from the leasing company. It is important to check with your leasing company to ensure you have the proper coverage.
Do I need full coverage car insurance for a leased car?
Yes, most leasing companies require that you have full coverage car insurance on your leased vehicle. This typically includes liability, collision, and comprehensive insurance.
What happens if I don’t have car insurance for my leased car?
If you do not have car insurance for your leased car, you may be in breach of your leasing agreement. This could lead to additional fees and charges, or even the repossession of your leased vehicle.
What is the difference between liability and full coverage car insurance?
Liability insurance covers damages that you may cause to other people or property in an accident, while full coverage car insurance includes liability insurance as well as collision and comprehensive insurance, which cover damages to your own vehicle.
Can I change my car insurance policy during a lease?
Yes, you can change your car insurance policy during a lease, but you should always check with your leasing company to ensure that you maintain the proper coverage.
Collision Insurance
Collision insurance is a type of car insurance that covers damages to your leased vehicle if it is involved in an accident with another vehicle or object, regardless of who is at fault. Collision insurance typically has a deductible, which is the amount you must pay out of pocket before insurance coverage kicks in.
When leasing a car, collision insurance is usually required by the leasing company. This is because the leasing company still owns the vehicle and wants to protect their investment.
What does collision insurance cover?
Collision insurance covers damages to your leased vehicle caused by:
- Collisions with other vehicles
- Collisions with objects such as trees, poles, or buildings
- Single-car accidents, such as hitting a pothole or rolling over
How much does collision insurance cost?
The cost of collision insurance depends on a number of factors, including:
- The value of your leased vehicle
- Your driving record
- Your age and gender
- Your location
- Your deductible
It is important to shop around and compare rates from different insurance companies to get the best deal on collision insurance.
Comprehensive Insurance
Comprehensive insurance is a type of car insurance that covers damages to your leased vehicle that are not caused by a collision, such as theft, vandalism, or damage from natural disasters like hail or flooding. Comprehensive insurance also typically has a deductible.
Like collision insurance, comprehensive insurance is usually required by the leasing company when leasing a car.
What does comprehensive insurance cover?
Comprehensive insurance covers damages to your leased vehicle caused by:
- Theft or attempted theft
- Vandalism
- Fire
- Natural disasters like hail, flooding, or earthquakes
- Animal damage
How much does comprehensive insurance cost?
The cost of comprehensive insurance depends on the same factors as collision insurance, including the value of your leased vehicle, your driving record, and your deductible. Again, it is important to shop around and compare rates from different insurance companies to get the best deal.
Gap Insurance
Gap insurance is a type of car insurance that covers the difference between what you owe on your leased vehicle and what your insurance company will pay in the event of a total loss or theft. This can be important because the value of your leased vehicle may depreciate faster than you pay off your lease.
Gap insurance is not always required when leasing a car, but it is recommended to protect yourself in the event of a serious accident or theft.
How does gap insurance work?
Let’s say you have a leased vehicle that you still owe $20,000 on. If your vehicle is totaled in an accident and the insurance company only pays $15,000 to cover the damages, you would be responsible for paying the $5,000 difference out of pocket. Gap insurance would cover this difference for you.
How much does gap insurance cost?
The cost of gap insurance varies depending on the value of your leased vehicle and the length of your lease. You can typically purchase gap insurance from your insurance company or from the leasing company.
Liability Insurance
Liability insurance is a type of car insurance that covers damages that you may cause to other people or property in an accident, but does not cover damages to your own vehicle. Liability insurance is required by law in most states, and is typically required by the leasing company when leasing a car.
What does liability insurance cover?
Liability insurance covers damages that you may cause to:
- Other people’s vehicles
- Other people’s property, such as buildings or fences
- Other people, including their medical bills and lost wages
How much liability insurance do I need?
The amount of liability insurance you need depends on your specific situation, but most states require a minimum amount of liability insurance coverage. You may want to consider purchasing more than the minimum required amount to protect yourself in the event of a serious accident.
Personal Injury Protection Insurance
Personal injury protection (PIP) insurance is a type of car insurance that covers medical expenses and lost wages for you and your passengers in the event of an accident, regardless of who is at fault. This type of insurance is not required in all states, but is required in some.
What does personal injury protection insurance cover?
Personal injury protection insurance covers:
- Medical expenses for you and your passengers
- Lost wages if you are unable to work due to an accident
- Funeral expenses
- Childcare expenses
- Other expenses related to an accident
How much personal injury protection insurance do I need?
The amount of personal injury protection insurance you need depends on your specific situation. Some states require a minimum amount of coverage, while others do not. You may want to consider purchasing more than the minimum required amount to protect yourself and your passengers in the event of an accident.
Uninsured/Underinsured Motorist Insurance
Uninsured/underinsured motorist insurance is a type of car insurance that covers damages and medical expenses if you are involved in an accident with a driver who does not have enough insurance to cover the damages. This type of insurance is not required in all states, but is required in some.
What does uninsured/underinsured motorist insurance cover?
Uninsured/underinsured motorist insurance covers:
- Medical expenses for you and your passengers
- Lost wages if you are unable to work due to an accident
- Vehicle repairs
- Other expenses related to an accident
How much uninsured/underinsured motorist insurance do I need?
The amount of uninsured/underinsured motorist insurance you need depends on your specific situation. Some states require a minimum amount of coverage, while others do not. You may want to consider purchasing more than the minimum required amount to protect yourself in the event of an accident with an uninsured or underinsured driver.