Leased Vehicles: Car Insurance Options for You
A driver who is interested in leasing a vehicle, either for business or personal use, may want to know more about their car insurance options. To figure out what your choices are for insuring a lease, you have to know where to start.
Necessary Insurance for Leased Vehicles
When it comes to vehicle leasing, drivers who lease vehicles have to know about basic mandatory insurance they will need. A lot of this insurance is to satisfy the investment of the lienholder, the company that leases the vehicle out.
This necessary insurance starts with liability insurance. Most states mandate liability insurance anyway, but some lease agreements may require more. Liability insurance covers payouts to third parties, such as other drivers and passengers, as well as pedestrians, in an accident where the policyholder is at fault.
Leased vehicle drivers will probably also have to get collision and comprehensive policies for their car or truck. These insurance policies cover damage to that vehicle. Comprehensive covers damage in additional situations like theft, vandalism, fire and flood.
All of this insurance is usually necessary for a leased vehicle. However, it may not be enough to completely safeguard the driver's investment. Luckily, there are additional insurance packages that provide more options for private car leasing, where someone who participates in a personal car contract hire (a term for personal vehicle leasing) can make sure they are covered for extreme cases of damage to the vehicle.
Gap Insurance Options
As mentioned above, comprehensive and collision policies cover damage to the vehicle. However, it's not uncommon for an insurance company to pay out a lower total amount than the value assessed by the leasing company. Too often, the leasing driver gets caught in the middle. In the case of a total wreck, he or she may receive a smaller insurance payment than the amount the leasing company is asking for.
Most of the main options for insuring these vehicles come in the form of gap insurance. There are customized gap insurance policies that will insure the vehicle for the difference between its blue book value and the value a company has put into it. Drivers can assess specific gap insurance packages, and match them to their needs for fully insuring their leased vehicle.
A business that is leasing a vehicle may have additional options. Some businesses will go with a standard gap insurance option, but others will incorporate vehicle leasing into a larger system. It may be possible for a business to get a favorable insurance rate for a leased vehicle as part of an overall umbrella policy that covers the daily operations of the business, as well as special events.
The above illustrates how many leased vehicle drivers make sure they have enough insurance for the road ahead. Looking critically at the lease agreement will help a vehicle borrower avoid getting caught in the middle when a collision devalues their car or truck and leads to problematic claim situations.