Insuring A Leased Vehicle

Insuring a leased vehicle still requires you to purchase your own auto insurance policy.  Typical coverage will include at least the state minimum, along with collision and comprehensive, although most leasing companies have set their own minimums higher than the state minimums.

Leasing a car is like borrowing it.  You don’t own a leased vehicle, the leasing company does.  At the end of the lease, they hope to sell the car at a profit.  The lease agreement spells out a bunch of conditions that protect their investment.  Of course, they want the car returned in tip top shape too.

Insurance will be required before you pick up the car.  In many  cases, it will be more than the state required minimums as the leasing companies don’t want to be on the hook.  Higher limits and lower deductibles are the norm.  Collision will be required as they don’t want a crunched car back, and in most cases they will specify that only OEM parts be used for the repairs.  They don’t want their cars back with junkyard or cheapo parts.

The leasing company may also require Gap insurance and will probably add this in to your monthly payments. Gap insurance is the difference, or Gap, between what your car’s book value might be and what you owe. You have probably heard the expression that “a new car loses 20% of it’s value the minute it’s driven off the showroom floor”. Well, if you crack it up, you still owe the full amount, but your insurance won’t pay you the 20% that the car has depreciated. Gap insurance covers the difference.

As with most types of insurance, it pays to shop around.  Your current insurance company might not be the best deal for insuring a leased vehicle. The internet is great for that. Be sure to ask for available discounts, some of them are substantial.  A few minutes spent shopping can yield big savings.

There is also a growing form of automobile leasing called subscriptions. Subscriptions are all-inclusive. Insurance and maintenance are included in the monthly fee. You may not need your own basic insurance for a subscribed vehicle, but many drivers might need additional liability coverage through an umbrella policy.