Car leasing is a way to drive a new car with no obligations and can have lower monthly payments than outright purchases. Just because you don’t own a car doesn’t mean you have to waive your insurance payments. Insurance requirements may be stricter in terms of minimum coverage and deductibles. With a lease agreement, even if your car is a total loss in an accident, you may still be required to service the car, repair any major damage, and pay the lease payments.
What insurance do I need for my leased car? The National Consumer Leasing Act requires “a brief description of the insurance provided or paid by the landlord or requested by the lessee, including the type and amount of coverage and costs”1. Your dealer will tell you what type of insurance you need. I take it out to protect my property, in this case this car.
What optional coverage may be offered for leased vehicles? When purchasing, financing, or leasing a vehicle, dealers offer optional packages and customized coverage such as extended service agreements and roadside assistance. You may Coverage specific to leased vehicles includes:
Guaranteed car protection: Covers the gap between the actual value of the car and the amount you owe and is mandated by some leasing companies.
These indemnifications and surcharges can increase lease costs and interest expense. In some cases, you may opt out of the dealer’s insurance and purchase your own insurance instead. In some cases, an insurance policy may overlap with existing insurance coverage. For example, an extended service contract may duplicate some of your new car warranty, or you may not need credit or disability insurance if you have life insurance. Do I need gap insurance for my leased vehicle? Gap insurance, also known as guaranteed auto liability insurance, settles the difference between what you owe for your leased vehicle and what your insurer would pay if your vehicle were a total loss.