A car is an undeniable necessity of modern life. Not everyone, however, can own one as it requires a significant financial commitment. A viable solution is to lease a car. 

Now, leasing a car has its responsibilities. One of them is purchasing insurance. When you purchase auto insurance, you ensure protection against expenditures if anything untoward happens to the car.

Understanding why you need car insurance for leased cars and exploring the types of insurance can help you make an informed decision. Read on to know the details.  

Car Insurance for Leased Cars: Why Do You Need It?

Purchasing car insurance is a legal obligation in most states. You must fulfill it before you can drive legally. 

However, that’s not the only reason to purchase insurance on leased car. Insurance can protect you from financial losses if you ever end up in an accident that damages another vehicle or injures someone. It also extends protection against losses caused by weather, vandalism, and other issues.

Types of Auto Insurance on Leased Cars

When you lease a car, your insurance requirements may be more extensive than when you own one. You must fulfill the insurance requirements set by the leasing company and the state. 

Insurance Requirements by Leasing Company

Since the leasing company owns the car and wants to protect its investment, the insurance requirement is specified in the contract you sign. You may need coverage higher than state minimums.

Here are some types of auto insurance on leased cars you may need to purchase.

Comprehensive Coverage:

Comprehensive coverage covers damages caused by events over which you have no control. This includes fire, theft, weather, animal accidents, and vandalism.

Collision Coverage:

Collision coverage on a leased car protects you financially if your vehicle suffers damage in a collision. The insurance doesn’t consider who is at fault. So, whether your car is involved in an accident with another vehicle or hits a stationary object, the insurance will cover the damages.

Gap Coverage:

When you lease a car, you do so against an amount you agree to pay to the leasing company. If the vehicle is stolen, gap insurance pays the difference between the car’s value and the amount of your lease. It insulates you from bearing the balance loan amount.

Insurance Requirements by State

Once you lease a car, you must fulfill the minimum level of insurance liability set by your state. This liability can include the following types of coverage.

Property Damage Liability Insurance:

It pays for the damage caused in an accident to another driver’s vehicle or property due to your fault.  

Bodily Injury Liability Insurance:

This insurance covers the expenses for the other driver’s treatment when an accident happens, and you are at fault.

Personal Injury Protection:

If you are involved in an accident, this insurance covers your medical bills. It doesn’t consider who’s at fault. 

Uninsured and Underinsured Motorist Insurance:

If an uninsured or underinsured driver hits you, this insurance covers the expenses for your property damage and injuries.

Medpay:

It covers the medical expenses if you or your passengers are hurt in an accident. This insurance doesn’t take into account who is at fault.

How Much Insurance Coverage Do You Need to Buy?

The minimum insurance requirements can vary from one state to another. Before leasing a car, check the requirements for your state. 

Another thing to check is whether your leasing company requires you to buy full coverage insurance. Auto insurance full coverage includes both comprehensive and collision coverage. It ensures extensive financial protection against damages and accidents.

Note that the cost of car insurance for leased cars can be higher if you choose an expensive vehicle.

Once you know the requirements, you can determine the coverage you need.

Wrapping Up

When you lease a car, you need to pay for its insurance.  The coverage you buy must meet the insurance requirements of your leasing company and your state.   

For the best deal on your leased car coverage, consider comparing the available options first. At ConsumerCoverage, you can quickly compare auto insurance quotes and find affordable coverage tailored to your leased vehicle. So why wait? Head over to our site and secure the protection you need at a price that works for you!