Insuring a Car You Are Currently Leasing

Leasing is becoming an increasingly popular trend among drivers recently. With all the benefits leasing has to offer, it’s not surprising. Leasing allows you to get a new car every few years, avoid the hassle of trying to sell or trade your car, and drive a car that you might not otherwise be able to afford. As an added bonus, the car is covered by the manufacturer’s warranty for the entire time you drive it, which means you don’t have to worry about it dying on you. However, even if you lease a vehicle, you are still responsible for insuring it. In this post, we’ll discuss the basics of insuring a leased vehicle.

Facts about Insurance for a Leased Vehicle

Typically, the auto dealer from which you lease your car mandates that you have at least comprehensive and collision coverage on the vehicle. Collision coverage will pay for damages to the vehicle caused by a collision with another vehicle or object. Comprehensive coverage pays for damages that are not collision related (e.g., theft, fire, vandalism, etc.). These coverages can help you avoid a financial disaster, and they protect the dealer from financial losses on the vehicle as well. Some auto dealers and certain state laws may require you to have additional insurance coverage, such as gap or liability insurance.

About Gap Insurance

Gap insurance is not available in all states, but most drivers find it to be a wise investment. Gap insurance can protect you in the event your leased vehicle is totaled. Sometimes when leased vehicles are totaled, drivers find themselves owing the dealer more than the amount of money the insurance company is willing to give them. The reason this happens is simple-insurers reimburse you for the actual cash value of the car. Naturally, the car depreciates in value over time, so it is usually not worth the full amount you owe back to the dealer. To cover this disparity, you can take out gap insurance. Gap insurance can help you avoid the costly situation of making payments on a car you no longer have while also having to pay for a new car. Sometimes, gap insurance is included in the lease of the vehicle. If not, you should seriously consider it to save yourself from a potential financial disaster if your car is ever totaled. Thus, before you lease your vehicle, make sure you have all of the insurance coverages you need to protect yourself so an accident doesn’t end up costing you more than it should.