Haris Ashley
When leasing a car, you are required to have car insurance coverage at all times. This includes meeting the minimum auto insurance standards of your state, as well as any other requirements set by the leasing company. While specific requirements vary across states, there are several standard coverages you may need to meet the legal minimum required car insurance.
| Characteristics | Values |
|---|---|
| Collision coverage | Pays for damage caused in an accident with another vehicle or an object |
| Comprehensive coverage | Pays for damages caused by events outside of your control, including weather, acts of nature, theft, vandalism, fire, and animal accidents |
| Bodily injury liability coverage | Covers medical expenses for others injured in an accident for which you are at fault |
| Property damage liability coverage | Covers damage to another person's property in the event of an accident |
| Uninsured motorist coverage | Covers your expenses if you are in an accident caused by an uninsured driver |
| Underinsured motorist coverage | Covers your expenses if you are in an accident caused by a driver whose insurance cannot cover your costs |
| Personal injury protection | Covers medical expenses for you and passengers, regardless of fault |
| Medical payments coverage | Covers medical expenses for you and your passengers if you’re injured in an accident, regardless of fault |
| Gap insurance | Covers the difference between the amount owed and the actual value of a vehicle |
What You'll Learn
Comprehensive coverage
When leasing a car, you will be required to have car insurance coverage at all times. This includes meeting the minimum auto insurance standards of your state, as well as any other requirements set by your leasing company. Comprehensive coverage is one of the two types of physical damage coverage that leasing companies require, the other being collision coverage.
The actual cash value of your car determines the payout from your insurance company in the event of a total loss. Comprehensive coverage includes a deductible, which is the amount deducted from your claims check. The maximum deductible for comprehensive coverage is usually set by the leasing company and often ranges from $1,000 to $2,500.
While the specific requirements vary across states and leasing companies, comprehensive coverage is a crucial aspect of ensuring your leased vehicle. It provides financial protection against unforeseen events and helps maintain the condition of the car during the lease period.
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Collision coverage
Nearly all leasing companies will require you to have collision coverage as part of your auto insurance policy. This is because the leasing company wants to ensure that their asset, the vehicle, is protected in case of any accidents. While state requirements for car insurance may vary, collision coverage is often mandated by leasing companies to provide financial protection for both the lessee and the leasing company.
The cost of collision coverage can vary depending on factors such as the make and model of the vehicle, your driving record, and the state in which you reside. It is important to note that collision coverage typically includes a deductible, which is the amount you will need to pay out of pocket before the insurance company covers the remaining costs. The deductible amount can range from $500 to $1,000, depending on the policy and the leasing company's requirements.
When obtaining auto insurance for a leased vehicle, it is crucial to carefully review the lease agreement and understand the specific requirements mandated by the leasing company. Some leasing companies may require higher levels of collision coverage, especially if the vehicle is of significant value. Additionally, it is recommended to shop around and compare quotes from multiple insurance providers to find the best coverage at a competitive price.
In summary, collision coverage is a vital aspect of auto insurance for leased vehicles. It provides financial protection for both the lessee and the leasing company in the event of accidents. By understanding the requirements set by the leasing company and choosing an appropriate insurance policy, you can ensure that you are adequately covered in case of any unforeseen incidents involving your leased vehicle.
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Bodily injury liability
When leasing a vehicle, you will need to meet the state's minimum auto insurance requirements, which typically include bodily injury liability insurance. This type of insurance covers the medical expenses of other people involved in an accident where you are at fault. It also covers other costs, such as the other driver's loss of income and your legal fees if you are sued due to the accident.
It's important to note that bodily injury liability insurance does not cover your own medical costs or damage to your vehicle. If you want coverage for your own medical expenses, you may need to purchase additional insurance, such as personal injury protection or medical payments (MedPay) coverage. To cover damage to your vehicle, you would need to purchase collision insurance.
While the minimum coverage required by your state may be sufficient to drive legally, it may not be enough to protect you financially in the event of a significant accident. Selecting higher liability limits can increase your protection and provide greater peace of mind.
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Property damage liability
Understanding Property Damage Liability
Minimum Coverage Requirements for Leased Vehicles
When leasing a vehicle, it's essential to meet the minimum insurance requirements stipulated by your leasing company and the state where the car will be registered. While specific requirements vary, leasing companies often demand higher property damage liability coverage than the state minimums. Commonly, leasing companies require property damage liability insurance of $50,000 per accident. This coverage is designed to protect the leasing company's asset, as they are the legal owners of the vehicle.
How Property Damage Liability Works
Choosing Adequate Property Damage Liability Coverage
While state-mandated minimums for property damage liability insurance exist, they may not be sufficient to cover all potential damages. It is recommended to select higher liability limits to enhance your financial protection. Consider your financial situation and opt for coverage that minimizes your out-of-pocket expenses in the event of an accident.
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Gap insurance
When a car is written off, standard auto insurance policies will pay out the vehicle's market value at the time of the incident. However, this can be significantly less than the amount you still owe on your lease. This is where Gap insurance comes in. It covers the difference between the amount owed on the lease and the car's actual cash value, ensuring you are not left paying for a vehicle you no longer have.
Even if your lease agreement doesn't mandate Gap insurance, it can still be a worthwhile investment, especially if you made a low down payment, have a long lease term, or are leasing a luxury vehicle.
Before purchasing Gap insurance, it is essential to review your lease agreement carefully. Some leasing companies may include it as part of the package, and you don't want to pay for duplicate coverage. Additionally, ensure you understand what is and isn't covered by Gap insurance, as it does not cover things like lease penalties, mileage overages, or repairs to the vehicle.
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Frequently asked questions
The minimum coverage for auto insurance for leased vehicles typically includes comprehensive and collision coverage, which covers damage to the vehicle caused by accidents or other events. In addition, leasing companies may require liability coverage for bodily injury and property damage, with minimum limits specified in the lease agreement.
Yes, auto insurance is required for leased vehicles. The leasing company may require you to maintain specific types and amounts of insurance to protect their investment in the vehicle.
The person leasing the vehicle is responsible for paying the insurance premiums. However, the leasing company may be listed as an additional insured and loss payee on the policy.
Yes, you can typically choose your own insurance company for a leased vehicle, but it is important to ensure that the insurance policy meets the requirements specified by the leasing company.
If you do not have sufficient insurance coverage for your leased vehicle, the leasing company may purchase additional insurance on your behalf, which is called force-placed insurance. This type of insurance can be more expensive and may result in additional costs for the lessee.
