By law, every car on the road must be insured. If you own or are buying a car the choices for insurance coverage on that vehicle are different than for one that you are leasing.
Insuring a leased vehicle is a bit different than insuring a vehicle you own or are in the process of buying. When you are purchasing a vehicle, you have options as to the type and coverages you can get. With a leased vehicle the options are limited and, in most cases, mandated as to the type and coverage you must get. Also, with a lease, insurance will most likely be a part of your lease agreement stating that you will comply with the auto dealer.
Mandated insurance for a leased vehicle may come in a few varieties but the most common will most likely be collision and comprehensive insurance. Also, when leasing a vehicle, it is highly recommended that gap insurance also be arranged for.
The required collision insurance will cover your vehicle in the case of a collision with another vehicle or an object. The thing to remember about collision insurance is that it will probably have a deductible that you will have to pay if you file a claim.
Comprehensive coverage will most likely be required on a leased vehicle. Comprehensive insurance covers everything from fire to theft to weather damage and a multitude of other things that could possibly go wrong with a vehicle. Like collision insurance, comprehensive coverage will also come with a deductible if you file a claim.
It is important to have gap insurance on a leased vehicle. Gap insurance is to protect you if your leased vehicle is totaled or stolen while your leasing it. Insurance companies will only give you the cash value of the vehicle not the price in your lease agreement so you need gap insurance to cover any difference.
If you’re thinking of leasing your next vehicle, make sure you take the cost of mandated insurance into account.