Leasing a vehicle certainly isn’t the cheapest way to own a vehicle, but for some, a leased car may be the best option. Leasing a vehicle comes with a lot of strings attached. As with any car, you have the regular maintenance costs of owning a vehicle. But with a leased vehicle, you also have additional fees including extra mileage fees, and usage fees, just to name a few.
What many people aren’t aware of is the additional insurance costs associated with a leased vehicle. The cost of a collision will cost you an arm and a leg, but getting insurance for a leased vehicle to begin with can be the most costly task.
The terms on your lease are likely to require above average auto coverage. Liability coverage of $100,000/person, $300,000/accident for bodily injuries, and $50,000 worth of liability insurance for property damages is the industry standard, about 4 times more than state requirements. And don’t forget to get comprehensive and collision coverage, as it’s likely required by the terms of the lease.
Gap Insurance And Your Leased Vehicle
Drivers of leased vehicles may be out a lot of money if they are involved in a collision with another vehicle. If a vehicle is damaged over 70% of its worth, the insurance company is likely to label the car totaled meaning it’s not worth the cost of repairs.
If a leased vehicle is deemed totaled by the insurance company, you will have to pay that money forward to the lienholder to start paying off the remaining balance on your lease. This is usually a great sum of money, however, it still may not be enough to get out of your lease agreement.
To prevent this from ever happening, all you have to do is get gap insurance, a common coverage type for those that lease their cars. Gap insurance will cover the remaining cost of getting out of a lease, so you can get back on the road in another leased car or any car for that matter.
The terms of gap insurance generally insist you have both comprehensive and collision coverage. If not, you may void your chance of getting any protection from gap coverage. But not all lease agreements include gap insurance. It varies greatly on the worth of the vehicle, but typically you can find gap insurance from a 3rd party relatively cheap.
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Remember – Leasing a car isn’t cheap, but safely insuring your vehicle can safe you a lot of money if the worst was to happen.