After you’ve weighed the pros and cons of owning versus leasing a car and decided to proceed with a leasing agreement, you need to obtain adequate insurance coverage. Most car dealerships require you to carry a certain type of insurance when leasing a car, and you typically have fewer options than if you were buying the car with cash. Since the company you sign the leasing agreement with must take care of maintenance and repair issues, most want the car owner to carry more than your state’s minimum liability coverage. This means you will probably end up paying a higher-than-average premium for car insurance.
Here’s what you need to know about insuring a leased car:
Getting Comprehensive and Collision Coverage
Most car dealers will require you to carry collision, comprehensive and liability coverage for your vehicle. These provide extensive coverage for the average motorist, and may seem like much more than you actually need. Review the lease terms in detail to determine what the minimum requirements are, and keep in mind that most will be much higher than state minimums.
Shop Around for the Best Quote
Even though you may be expecting to pay a high car insurance premium, you can still shop around for the best price. Insurance companies are becoming increasingly competitive, and you may be eligible for certain types of discounts and special offers from certain companies. Take some time to shop around for the best quote so that you really are getting the best price.
Review the Benefits of Additional Coverage
If you get into an accident with your leased vehicle and don’t have adequate insurance coverage, you will need to pay for some of the expenses out-of-pocket. Repair services for high-end cars and luxury vehicles may be out of your budget range, so consider the benefits of additional coverage or extended coverage when leasing. If you live or drive in high-traffic areas regularly, or you have a history of getting into car accidents, you may fare better with additional coverage.
Learn About Gap Insurance Coverage
Most lease contracts include gap insurance coverage. This type of coverage pays for the costs of replacing your vehicle in the event of an accident where the car is totaled. If you have this type of insurance and your car is declared “totaled” after the accident, the insurance company will pay out the amount that the vehicle is worth. This type of coverage can also help you save some money in the event of a serious accident. Keep in mind that not having comprehensive and collision coverage on your leased vehicle means you won’t be eligible to receive any benefits from gap insurance.
Make sure you review your lease agreement in detail to determine the minimum amount of insurance coverage you are required to carry. Shopping around for the best quote can help you save on insurance for your leased vehicle, and also give you more options if you want to purchase extended or additional coverage.
