Insuring Your Leased Vehicle

You may know that you are likely required to purchase minimum levels of auto insurance by state law. This is to ensure that in the event of an accident that you cause, the victim will not be left to cover the repair or personal injury expenses. What you may not know, however, is that if your car is a leased vehicle, you are typically required to purchase added coverage. The lease contract may have a variety of fees and seemingly hidden costs regarding termination of the lease, mileage, and the inevitable aging of the vehicle. Chances are, the lease also addresses the dealership's requirements for auto insurance. Typically you will be required to purchase extra liability insurance, as well as extra collision and comprehensive coverage.

These added insurance policies are designed to protect the dealer from a variety of risks. The lease contract will most likely demand a policy that will provide adequate coverage for property or bodily injury that you may inflict on another party, as well as protection from theft, vandalism, and natural disaster.

One of the most common coverages demanded by your lease will be gap insurance. This coverage will pay the difference between your total lease costs and the value of the car should your vehicle be totaled, either in an accident or because of an accident. This guarantees that should the car become completely destroyed, your insurance policy will make sure that the cash value of the vehicle will be adequately reimbursed. If the costs of repairing the vehicle is more than three quarters of the car's worth, it will most likely be totaled. Even if your lease does not require you to purchase gap coverage, it is often wise to buy it on your own volition. It would be unfortunate if you are in a serious accident and your policy does not cover the full worth of the car. In this case, you could find yourself paying out-of-pocket for a vehicle you no longer have.

It is important to remember that if you do not have the necessary coverage required by law and by your lease, your gap coverage policy will be invalid. In the event of a serious accident where your leased car is totaled, it is still important that you pay the regular lease payments until the insurance has paid for your expenses, otherwise you could suffer serious blemishes on your credit record. This could seriously effect your ability to take out a loan, lease a new vehicle, and can raise your premium rates.

Be careful if your insurance agency chooses to repair the car following a serious accident, as opposed to totaling it. The repairs that are made by your insurance company may have an impact on your lease contract. Consult your contract and the involved parties before making any repairs, as this may cost you at the end of your lease term. It is always best to return your car at the end of the lease term exactly how you received it. Should your car require repair, it is worth the effort and even the money to make sure that any replacement parts match what was initially in the vehicle, otherwise you may end up paying twice for the repair, as the lease may require you to pay for the manufacturer's parts when you return the car. It is possible that even if you do not need to pay for the complete costs of the original parts, you may have to pay for the difference between those parts and the replacement parts.

You may be leasing a car as an affordable alternative to purchasing a new vehicle, however if you do not have the proper coverage, it may not be worth it. Carefully review your lease agreement and your existing auto insurance. If you feel that you are still exposed, gap insurance can provide you with adequate protection in the event of a serious accident that requires extensive repair, or that may lead to your insurance company totaling your car.

For quotes on auto insurance be sure to check out www.getagreatrate.com or www.greatcarinsurancerates.com.

©2004 The Lawrence Marketing Group

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