Your vehicle could have mysteriously broken down and died at an inconvenient time. You might be someone who is constantly on the move and doesn’t stay in one place for long. You might simply just be slowly saving up enough money for a car of your own. You could even be a man on a long-term vacation that just needs a temporary ride for a few weeks or months. Whatever the case may be, leasing a vehicle, might be the most bang-for-buck solution for your needs.
Think about it: maintenance of the vehicle is handled by someone else, most of the paperwork is done for you, and you don’t have to worry about insurance…
… or do you? Do you know that a leased vehicle does not always come with its own insurance plan and policy? Do you know that you might have to pay hefty fines just because you’re unaware of this? If you’re driving a leased vehicle, you better check with your lien-holder about auto insurance for your leased vehicle!
If insuring your leased vehicle is your main agenda right now, then you’ve come to the right place: continue reading below to find out how to properly insure a car that you are leasing.
How Expensive Is Auto Insurance For Leased Vehicles?
So, you’ve been driving for a while now, and you’ve gotten to a point where your auto insurance premiums are pretty low. However, you’re moving to a new state for a few months, and are looking to lease a car in the state you’re moving to. “My auto insurance premiums will definitely be as low as before”, you think smugly to yourself.
Wrong! In reality, premiums are much, much higher for leased vehicles, because the coverage for leased vehicles are about 4 times that of state requirements! Usually, your lien-holder will gun for about $100,000 worth of Personal Injury Protection, $300,000 for Bodily Injury Liability and $50,000 for Property Damage Liability. That’s a lot of coverage for a vehicle, but you’ll have to do as the lien-holder dictates – because he’s leasing his car to you!
Gap Insurance Coverage For Your Leased Car
There’s also another thing you need to thing about in regards to insurance for leased vehicles: gap insurance. Gap insurance is the insurance that covers the “gap” between the actual value of your vehicle and the amount you still owe on it.
To explain it further: your vehicle’s worth is estimated by its net value, and this value drops as the years go by. In fact, the value of your vehicle falls dramatically by about 20% the moment you drive it out of the dealership!
When you crash in an accident, the vehicle is deemed as “ totaled” if it suffered irreparable damage. You will then be reimbursed the value of your vehicle at the point of collision – which means that the depreciated value will not be reimbursed to you.
Gap insurance prevents just that – by having gap insurance, you will get a larger percentage of the original value of your vehicle back when the insurance company pays out your claim.
Usually, most people do not get this insurance because of the large amount of premiums they have to shelve out. However, lien-holders always purchase this sort of insurance – which is why insuring your leased vehicle might be a big headache for you.
Who’s Actually Paying The Auto Insurance Bill For A Lease?
For leased vehicles, there might be a grey area in terms of who is supposed to pay for the insurance. Most lien-holders will pay for the premiums themselves, and reflect the extra charges in the price of leasing the vehicle out to you. Other times, you will have to settle premium from insuring your leased vehicle yourself. The bottom line is this: check with your lien-holder before you do anything. If you are still not sure, give your auto insurance agent a call and check with him or her. When it comes to lease vehicles and all the financial headache that could be involved, it’s always better to be safe than sorry!