In most cases, leasing a new vehicle will require that you carry specific auto insurance coverage, as determined by your particular leasing company. In almost all cases, this coverage will far exceed the minimum requirements mandated by the laws of the state in which said vehicle is registered. When signing up to lease a car or truck it’s important to read the fine print carefully, as these leasing contracts are known to contain stringent limitations and requirements not always immediately apparent to the consumer. Insurance rates on a leased vehicle may also be higher than you expected. And, without ‘gap’ insurance, you could conceivably still have to make payments on a vehicle that’s been so badly damaged in a collision that the insurance provider has totaled it.
In addition to fees and penalties that may be assessed on leased vehicles for things like too much wear and tear, excess mileage or early termination of the contract, lessees need to take into consideration the additional expense of maintaining full insurance coverage on their new vehicle lease. It is almost certain that a leased vehicle will be required to have both collision and comprehensive coverage in force. Additionally, the deductible amounts opted for may also be specified within certain limits. If lower deductibles are required, higher insurance rates are certain.
Some automobile lease companies will, in addition to requiring collision and comprehensive insurance, require that state-mandated minimums of liability protection be upped to significantly higher limits. It’s not uncommon for a leasing company to require 100/300/50 liability amounts, which is four times the minimum amount required by most states. Naturally, higher liability limits equal higher insurance rates, translating to more out of pocket expense to the insured. If you’re planning on leasing a car it’s good to consider these things.
Finally, there’s a little detail associated with the term of the lease that can become a problem, especially if the leased vehicle you’re driving is totaled in an accident. No matter the terms of the insurance settlement, your responsibility is still to fulfill the terms of the lease agreement. If the insurance payoff ends up being less than the amount still due on the lease contract, payments will have to be made until the contract is satisfied.
Some lease insurance companies offer what’s known as gap insurance. This pays for the gap left between the insurance company benefit and the actual amount still owed on a lease obligation, in the event the car in question is either totaled or stolen. This coverage protects you from having to continue making payments on a car you don’t even possess or are able to use.