Leasing a car has grown increasingly popular in the past few years. Whether it’s because the concept of ownership is changing, or drivers just want the freedom to upgrade more frequently, the numbers don’t lie! Ultimately, it’s a personal decision, depending on whether or not you want the responsibility of owning (and maintaining) a car at the end of your payments. Either way, though, if you’re the one behind the wheel, you’re going to need auto insurance.
What types of coverage do you need?
Often the requirements for leased cars are a little stricter than vehicles you own outright. Since you’re not the only one who has an interest in the safety and maintenance of this automobile, you have to comply with others’ requests. Plus, there are state-mandated provisions you have to include, no matter what. Today, we’ll touch on both.
What are the state regulations?
Depending on which state you live in, these could vary. However, in Maryland, you have to have both liability coverage, as well as uninsured/underinsured motorist coverage. The latter just makes sure that if you get into an accident with another driver who isn’t properly covered, you (or the motor company) aren’t stuck with the repair bills. Even though auto insurance is required in our state, you’d be surprised how many people are driving around without it!
With liability coverage, you’re insuring yourself against legal responsibility. Not for damages to another person’s vehicle, but to them. Or to their property, like a house, mailbox, etc. Often, you’ll see two different limits in place: Maryland’s mandated amount and the minimum the car’s official owner would like you to have. In this case, you’ll have to go with whichever is higher. That will likely be the company you’re leasing the car from since they don’t want to become legally entangled in any issues arising from your driving.
What will the lease holder require?
Both collision insurance and comprehensive coverage will typically be stipulated in your lease agreement. When you own a car, you have the option to exclude some of these provisions, but again here the car’s official owner is trying to protect its investment. So, you’ll have to carry extra insurance in the event of an accident.
Technically, collision insurance is what covers the cost to repair damages you’ve caused another car. The “comprehensive” part helps to pay for damages that aren’t necessarily your fault—or anyone else’s for that matter. It could be the result of vandalism, theft, extreme weather, or just plain bad luck. Whatever the reason, the insurance company will pay for the majority of the repairs (minus any deductible you have in place), so the car is fixed and returned safely to the lease holder.
What about gap insurance?
This type of coverage is usually reserved for car owners to make up for the rapid depreciation that comes along with new cars. That way, if the vehicle is totaled, one way or another, you’re not stuck paying back more than the car is worth. While you may not be required to carry it—you may still be paying for it. Often, it’s automatically rolled into the lease payments, so you won’t necessarily know. You can always ask your leasing company, though, if it’s included. If it’s not, feel free to pick up this policy for yourself. Even though you won’t have ownership over the car, you could get stuck with paying the difference if you’re the one who damages it.
All in all, insuring a leased car isn’t that different from covering one that you own. There are just more people involved, so you’ll likely have more protection in place—for all parties concerned. Usually, you have to have your auto insurance in place before the company will even let you drive it off the lot, so give us a call! We can give you quotes based on what you’re considering and then help you complete the paperwork needed to take home a new vehicle.