Leasing a new car is an exciting experience. There’s nothing quite like taking to the streets in a brand spanking new automobile – it can liven up even the dreariest, most mundane of commutes. But before you go ahead and sign on the dotted line, it’s important to realize what your car insurance obligations will be when leasing a car.
First off, automobile insurance when you lease a car isn’t quite the same as when you buy a vehicle. There can be distinct differences in coverage requirements. After all, when you a lease a car it is the lease company that technically owns it, and since it is their possession, they dictate what insurance coverage you need. So, you might have to get more coverage than if you had purchased the auto.
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You Will Need Collision Coverage
Collision coverage covers the cost of repairing your vehicle if get into an accident with another vehicle or object. The difference between liability and collision coverage is that liability only pays for repairs to the other vehicle(s) in an accident. Of course, liability insurance coverage is required by law, whether you bought or are leasing the vehicle.
The leasing company needs to protect their investment. Collision coverage ensures that in the event of any damage, the vehicle will be restored to its original condition. Even though it is technically the lease company’s property that is being protected, you still have to foot the bill, per your agreement with them.
You Will Need Comprehensive Coverage
Liability and collision insurance will pay the cost of repair or replacement of your vehicle and the other car(s) that are involved in an accident. But what if your car is damaged, but not from a collision? This is where comprehensive coverage comes in. This insurance will pay for repairs due to fire, theft, vandalism, weather damage, and other named risks.
The leasing company can’t risk letting their property become damaged and lose value. And if your car was stolen and never recovered, this would be a total loss. Again, even the insurance is to protect the lease company’s investment, you have to dish out the cash.
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You Will Need GAP Coverage
GAP insurance refers to the difference between the actual cash value of an automobile and what was paid for it. If the car is totaled in accident, the difference between what the insurance company will hand over and what was already paid for can be thousands of dollars.
Since the monetary risk is so significant, lease companies will mandate that you carry this coverage when leasing a vehicle. In fact, most lease companies will include the cost of GAP coverage in the lease itself. This is known as a “GAP waiver” and it exists because the lease company and auto dealership have already set up a prior agreement. Thoroughly read through your agreement with the lease company and see if the GAP coverage is already included in the lease. You certainly don’t want to buy insurance coverage that you don’t need.
Typical Insurance Coverage Amounts
These are ballpark figures, but this should give you an idea of how much coverage you will have to buy:
• Liability coverage: $100,000 per person / $300,000 per occurrence
• Property liability coverage for $50,000
• Comprehensive and collision for actual value with no more than $500 deductible.
These figures are subject to the discretion of the lease company. They decide how much you must buy. And what the best way to discover how to buy more auto insurance coverage for less is to get a free insurance quote here at Cheap Quotes Car Insurance!