Lease Deals And Insurance: What's Covered?

Do auto leases include insurance? The short answer is no, but it's not quite that simple. While standard car leasing agreements don't typically include insurance, it is possible to opt for insured leases that do cover this. This means you pay a rental sum for your contract term, which includes car insurance and vehicle leasing. This can be beneficial as it helps you plan your finances more easily, and you don't have to worry about searching for separate insurance.

Leasing a car without insurance

Standard car leasing agreements don't include insurance, but insured leases are available. These deals include a rental sum for your contract term that incorporates car insurance and vehicle leasing. Insured leases can help you plan your finances more easily, as you pay a fixed amount for the duration of your contract, and you won't have to worry about premiums increasing each year. Additionally, insured leases can streamline the repair process if your vehicle is damaged, as the lease provider won't have to wait for a third-party insurer's approval.

If you choose a standard leasing agreement without insurance, you will need to arrange appropriate cover separately. Policies differ widely in terms of what they cover, so it's important to understand your options. Third-party insurance, for example, offers the least amount of cover and is typically not available to lease car drivers. Comprehensive insurance, on the other hand, covers damage to your vehicle and includes a range of extras.

While leasing a car without insurance is not recommended and may have legal and financial repercussions, you can choose between standard leasing agreements and insured leases. Insured leases offer convenience and peace of mind, while standard leases provide more flexibility in choosing your insurance policy.

Benefits of leasing with insurance

Leasing a car comes with certain benefits, but it also requires additional insurance coverage compared to a financed or owned vehicle. This is because the leasing company technically owns the vehicle and wants to protect its investment. While this can result in higher insurance premiums, there are still advantages to leasing with insurance. Here are some benefits of leasing a car with insurance:

Financial Planning

Including insurance in your lease deal can help you plan your finances more effectively. You will pay a fixed amount for the duration of your contract (usually two to four years), meaning you won't be surprised by increasing premiums each year. A combined agreement also saves you the hassle of shopping for car insurance separately and dealing with annual renewal quotes.

Streamlined Repair Process

An insured lease can streamline the repair process if your vehicle is damaged. Since the leasing company does not have to wait for approval from a third-party insurer, repair work can start more quickly, getting you back on the road with minimal inconvenience.

Coverage Options

The insurance provided as part of a lease package can include a range of benefits, such as third-party liability, own damage protection, glass damage protection, guaranteed maintenance, and breakdown assistance. It may also include Gap insurance, which covers the difference between the amount your car was worth when new and its value if it is stolen or written off.

Lower Monthly Payments

Leasing a car generally comes with lower monthly payments compared to financing a vehicle. This allows you to drive a higher-end car for a more affordable monthly payment. Leasing also gives you the option to easily upgrade to a newer model every few years.

Depreciation Protection

Leasing protects you against unexpected depreciation. If the market value of your leased car drops suddenly, you have the option to buy it at a good price at the end of the lease, potentially reselling it for a profit.

In summary, while leasing a car with insurance may result in higher insurance costs, it also offers benefits such as financial planning, streamlined repairs, comprehensive coverage, lower monthly payments, and depreciation protection.

What insurance policy is needed when leasing

When leasing a car, you will need to meet the minimum auto insurance standards of your state, as well as any other requirements set by your leasing company. This means that the insurance policy you need will depend on where you live and which company you lease from.

State requirements

In the US, the most common type of required car insurance is liability insurance, which has two categories:

• Bodily injury liability coverage pays medical expenses for other people after an accident. A minimum of $25,000 per person and $50,000 per accident is most common.
• Property damage liability coverage pays for damage to other people’s property after an accident. A minimum of $10,000 per accident is typical.

Some states also require uninsured/underinsured motorist coverage and personal injury protection.

Leasing company requirements

Leasing companies often require a full-coverage insurance policy, which includes comprehensive and collision coverage. They may also require higher liability coverage than what is mandated by the state. Typically, leasing companies require:

• $100,000 of bodily injury liability coverage per person and $300,000 per accident
• $50,000 in property damage liability insurance

Some leasing companies also require gap insurance, which covers the difference between the amount owed on a lease and the actual value of the vehicle. This is useful if your leased car is new, as its value will depreciate rapidly. Gap insurance may be included in the price of your lease under the more generic term "lease coverage".

What is not included in insurance policies

While insurance policies for leased cars differ from state to state, there are some commonalities. Firstly, it is important to note that car insurance is not included in lease agreements, so you will need to purchase insurance separately. This insurance must meet the requirements of both your state and your lease agreement, and you will not be able to drive your leased car until you have done so.

The type and amount of insurance you will need depend on the requirements of your state and your leasing company. Most states require some level of liability coverage, including bodily injury liability coverage and property damage liability coverage. The minimum coverage required by your state may not be sufficient in the event of an accident, so selecting higher liability limits is recommended.

In addition to the coverage mandated by your state, your leasing company will likely require you to carry collision and comprehensive coverage. Collision coverage pays for damage to your car resulting from a collision with another vehicle or object, regardless of who is at fault. Comprehensive coverage, on the other hand, pays for damage to your car caused by events outside of your control, such as weather, acts of nature, theft, vandalism, fire, and animal accidents.

Another type of insurance that may be required by your leasing company is gap insurance. Gap insurance covers the difference between the amount owed on your lease and the actual value of the vehicle if it is stolen or written off. This type of insurance is particularly important for new vehicles, which depreciate quickly once they are driven off the dealership lot.

While not typically included in insurance policies for leased cars, there are a few other types of coverage that you may want to consider. One is original equipment manufacturer (OEM) parts coverage, which pays for the repair and restoration of your vehicle using only parts made by the original manufacturer. Another is uninsured/underinsured motorist coverage, which can help cover your expenses if you are injured or your property is damaged by a driver who does not have insurance or whose insurance is insufficient.

GAP insurance

Guaranteed Asset Protection (GAP) insurance is an optional vehicle coverage that assists in paying off your auto loan if your car is totalled or stolen and you owe more than the car's depreciated value. GAP insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you actually owe on it. This type of insurance is especially useful if you have made less than a 20% down payment, financed for 60 months or longer, leased the vehicle, purchased a vehicle that depreciates faster than the average, or rolled over negative equity from an old car loan into the new loan.

Frequently asked questions