The Silicon Review ^Asia

Some people prefer to use leased vehicles instead of buying their own. They find it more convenient to pay the lease than the mortgage for an owned car. However, they still need auto insurance coverage to protect them. Auto insurance is a must in almost every state in the United States, be it for an owned car or leased vehicle. 

Let's learn more about lease insurance, types, requirements, and ways to get affordable and low-cost auto insurance for a leased vehicle. 

Types of Car Lease Insurance 

There are primarily two types of car lease insurance policies that provide for physical damage to the car in case of accidents. 

• Comprehensive Coverage 

As the name says, it covers an array of incidents and events that may not be in your control. For example, natural calamities, accidents due to animals, theft, vandalism, etc., are covered. If the leased car has been stolen or damaged due to thunderstorms, tornados, broken trees, landslides, etc., the insurance company will pay for the damage when you file a claim. 

• Collision Coverage 

Collision coverage applies specifically when you (with the leased car) are in an accident with another vehicle or object/ property. Traffic accidents, driving into a pole, crashing into a telephone box, etc., are covered. The insurer will pay for the damages if you file a claim. 

That said, you need to have personal injury protection coverage to protect you from personal injuries. Moreover, you also need liability coverage for bodily injury and property damage to the other parties involved in the accident. Each state has determined the minimum limit for liability coverage. 

Lease insurance can become quite expensive if you are not careful. Finding affordable rates is important to limit the insurance premium within your budget. You also need to pay the lease on the car, after all. Get quotes from different insurance companies and compare the offerings. You can talk to an insurance agent and take their advice before finalizing a vehicle insurance policy from a provider. 

Requirements for Lease Insurance 

Lease insurance depends on a few factors, such as: 

• The state where the car is registered
• The minimum required insurance as mentioned by the lessor (leasing company)
• The make and model of the car 

It’s no surprise that luxury and high-end cars have a higher lease insurance premium to accommodate for repairs when the car has been in an accident, collision, or natural calamity. 

You also have to list the leasing company as loss payee and additional insured so that the insurance company can pay them for the damages in case of a claim. Even though the leasing company will take auto insurance on every vehicle it owns, the responsibility falls on the lessee as well. 

Though the laws change from one state to another, we can calculate the average amount for insurance coverage at: 

• $25K per person for bodily injury liability coverage 
• $50K per accident for bodily injury liability coverage
• $10K per accident for property damage liability coverage

In some states, you also need to have additional coverage for protection from underinsured and uninsured motorists if you end up as the victim or other party in an accident. That will help provide cover for your personal injuries and property damage (of the leased car) if the person accountable for the accident doesn’t have insurance or is underinsured and cannot fully pay for the damages. 

Gap Insurance for a Leased Car 

Now, as if the above-mentioned policies are not enough, there’s another coverage you need to consider when leasing a car/ vehicle. 

Gap insurance is taken by lessors or leasing companies as it provides additional protection during accidents. In short, gap insurance coverage deals with the difference in the amount owed and the actual cost of the vehicle. 

The value of a vehicle starts coming down immediately after it has been bought. When a leasing company buys a new car and leases it to a customer, the car’s value starts depreciating. Gap insurance covers this gap. That said, this coverage makes sense only when the leased car is new. Leasing an old or already used car should make too much difference to the insurance amount. 

Steps to getting Auto Insurance for the Leased Car 

• Choose a car from the leasing company based on your requirements. You don’t always need a new car (as the premium tends to be more). 
• Talk to an insurance agent and ask for quotes after determining the policy. 
• Complete the transaction and keep the soft copy and hard copy of the insurance policy with you at all times. 

Final Words

Most leasing companies offer insurance coverage with the car. However, that doesn’t mean you don’t have to shop around for cheap auto insurance. Doing your research will lower the premium amount while providing the necessary coverage.