What Car Insurance Coverage Do I Need?

Decide how much liability coverage is enough for similar type of drivers.

Getting Car Insurance For a Lease Car

Of all the factors that determine the cost of insuring your vehicle, the type of ownership is one of the crucial points. Hence, there is ought to be a difference in the rate of the insurance premium between the cars that you purchase out of personal cash and a leased vehicle. Paragraphs underneath shall discuss the key aspects related to the insurance of the leased cars.

What are the insurance policies that you require for leased cars?

The first and foremost question is the various policies that you need to pick for insuring a leased vehicle. As you will be driving a leased vehicle, its insurance needs will be different from the insurance needs of the cars that you buy with out-of-pocket money or you avail on rents.

Your leased car will require all the usual cooperages like the Personal Injury protection, Liability coverage, Collision coverage as well as you can include the optional coverage for towing and reimbursement of the rented cars. However, the insurance needs of these cars will not stop with all these schemes. Most importantly, you will require taking the scheme that will cover the liability, outstanding to the leasing company.

Hence, while paying the premium for the lease vehicle insurance, you should not mind, paying the higher cost. It will be wise to avail the liability coverage to the leasing company as it would take care of the monthly payment that you owe to the leasing company, in such instances, you are unable to make the payments yourself.

As a matter fact, the majority of the leasing companies will require you taking this liability coverage before you can drive your car. In some instances, the cost of the premium for this coverage is covered by the monthly payment you make, while in some instances, you will have to pay this amount up front. The extent of the coverage in this regard will depend on the amount that you owe the leasing company.

How does Gap Insurance work for a Leased Car?

Gap insurance on the leased car covers the difference in financial terms that arise between the total leasing value and the value that is not covered by the insurance policy, taken in your car. This value will include the cost of depreciation of the car as well. In simple terms, this is an additional coverage that will cover the liability that you owe to the leasing company, for the part of the value of the car that depreciates due to depreciation and other factors.

What are the differences between Rented and Leased vehicles?

Are rented and leased vehicles having differences in between them? Rented vehicles are those that you take on rent from a car agency or from other parties, on mutually agreed terms and conditions. In this case, you are availing the services, and not point of time; you will get the ownership of the vehicle. On the other hand, the leased vehicles are those that you take on the lease, typically from the car dealerships and on the maturity of the lease time, there is a chance for you to gain complete ownership of the car. While renting cars are temporary arrangements, the leased cars involve commitments for the longer time span. From the perspective of insurance needs, it is totally up to you that you will like to avail an insurance policy on such cars or not. However, if its a leased car, you will have to take all the applicable insurance coverages, compulsorily.

Leasing and Financing: The Difference

Though apparently, both these concepts sound identical, there are differences between the two. For leasing, you are not taking a loan, but, you are getting into an agreement for driving a car, owned by the leasing company. Thus, there are no strings of ownership associated with the leased car. The lease usually involves a specific time frame, restrictions on the extent of the distance that you can drive as well as payment of a certain amount as the leasing fee. On the other hand, when you finance your car, though it will be hypothecated to the financier, till the full repayment, you get the ownership of the car. If you are financing a car, you will owe a loan to the financier and you will require paying the principal amount and the interest on that amount, at an agreed rate.

Ways to Save When Getting Insurance with a Leased Vehicle

Following are some of the measures that will enable you to save some money by insuring your leased car:

  • You can install anti-theft and other safety devices that will reduce the risks of burglary and other related threats.
  • You should always maintain a healthy driving record.
  • You will be eligible for discounts on your policy if, you maintain an impressive credit score.

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