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Insuring a Leased Vehicle |
Insuring a leased vehicle is a bit different than insuring a vehicle you own or are in the process of buying. You have insurance options when you are purchasing a vehicle. When leasing a vehicle you are mandated to have certain vehicle insurance that will most likely be a part of your lease agreement stating that you will comply with the auto dealer.
The most common mandated insurance that an auto dealer will have you complying with would be collision and comprehensive insurance. Also, an insurance known as gap insurance is highly recommended when leasing a vehicle.
Collision Insurance
Collision insurance covers you if you collide with another vehicle or an object. Collision insurance also covers you if your vehicle is overturned. When having this type of insurance you have to remember it will most likely have a deductible that will come out of your pocket if you have to use it.
Comprehensive Insurance
Comprehensive insurance is another type of insurance that auto dealers may mandate you have when entering into a lease agreement with them. Comprehensive insurance covers everything from fire to theft to weather damage and a multitude of other things that could possibly go wrong with a vehicle. Like collision insurance, comprehensive insurance is subject to a deductible.
Gap Insurance
Gap insurance is especially important for leased vehicles. However, not all states have this insurance option. Gap insurance is to protect you if your leased vehicle is totaled while you are leasing it. Insurance companies will only give you the cash value of the vehicle not the price amount in your lease agreement. Therefore, gap insurance would fill in the gaps to cover your leased vehicle so you are not paying for something you do not have anymore.
Collision and comprehensive mandated insurance is there to protect not only you from financial loss but also to ensure the auto dealer does not suffer from financial loss. Therefore, when deciding to lease a vehicle over buying it make sure all your insurance options are considered. More insurance now may mean the difference of out of pocket expenses later.