InícioAutomobile InsuranceWhat Insurance Do You Need for a Leased Car?

What Insurance Do You Need for a Leased Car?

When renting a car, you must purchase car insurance even if you do not have a car.

That’s because no matter where you rent, you need to meet minimum car insurance standards, as well as other additional requirements for lessors, such as comprehensive and collision insurance.

Insurance Requirements for a Leased Car

When you rent a car, you must cover it; without it, you won’t be able to get out of trouble. Since auto insurance requirements are set at the state level, the coverage you need depends on the state where you want to register your car.

Your leasing company may also need a certain amount of insurance coverage, and some models will have higher insurance prices than others.

In addition, you must list the leasing company as an additional insured and loss payee. This means that since the lessor is the owner of the vehicle, the lessor can obtain compensation from the insurance company for any loss of the insured vehicle.

Common State Requirements

Auto insurance requirements may vary from state to state. The most common is liability insurance, which has two main forms:

1-Personal injury liability insurance is used to cover medical expenses for people other than you in an accident.

Under normal circumstances, the minimum insurance coverage per person is US$25,000, and the minimum insurance coverage per accident is US$50,000.

2-Property injury liability insurance is used to pay for damages to others’ property in the event of an accident. Generally, the minimum insurance coverage for each accident is $10,000.

Some of the less common requirements are uninsured/underinsured motorists and personal injury insurance. You can find the minimum auto insurance requirements for your state here.

What Insurance Do You Need for a Leased Car

Common Lessor Requirements

The rental company will usually require your car insurance policy to cover any possible damage to the rental vehicle. Therefore, they usually require:

Collision insurance is used to compensate for car damage caused by collision with objects or other vehicles.

Comprehensive protection, compensation for vehicle damage caused by crashes or crashes. These events are often referred to as “natural disasters” events, such as theft, damage caused by falling objects, and damage caused by natural disasters.

Some lessors also require that your insurance policy contains a liability insurance limit higher than the state minimum.

Generally, a leasing company requires a bodily injury liability insurance of US$100,000 per person, a property insurance of US$300,000 per accident, and a property damage liability insurance of US$50,000.

In addition, your lessor may need gap insurance or set a maximum deductible for collision and full coverage, such as $500 to $1,000.

Leasing CompanyAdditional Auto Insurance Requirements

GM

  • Full comprehensive and collision coverage
  • $1,000 maximum deductible for comprehensive and collision coverage

Honda

  • Full comprehensive and collision coverage

Kia

  • Bodily Injury Liability: $100,000 per person; $300,000 per accident
  • Property Damage Liability: $50,000 per accident
  • Full comprehensive and collision coverage
  • $1,000 maximum deductible for comprehensive and collision coverage

Mercedes-Benz

  • Bodily Injury Liability: $100,000 per person; $300,000 per accident
  • Property Damage Liability: $50,000 per accident
  • Full comprehensive and collision coverage
  • $2,500 maximum deductible for comprehensive and collision coverage

Gap Insurance for a Leased Car

Gap insurance covers the difference between the amount owed and the actual value of the vehicle, and the lessor may demand this difference.

It is mainly used for new cars, which will quickly depreciate once they are withdrawn from the dealer, and it usually doesn’t make any sense if you rent a used car.

The maximum benefit you can get from gap insurance is usually limited; depending on your policy, the cost can range from $30,000 to $125,000.

For example, suppose you rent a new car for $30,000, drive it for a week, and then total it. If your insurance company determines that the actual value of your car is $27,000, then Gap Insurance will pay the difference of $3,000 between the premium you will pay and the vehicle you owe.

The gap insurance provided by the lessor can be an additional monthly fee or a one-time upfront fee. If you purchase gap insurance through a car insurance company, the insurance cost will be added to your monthly premium.

Is It More Expensive to Insure a Leased Car?

Whether the vehicle is rented or owned has nothing to do with insurance costs. However, rental companies will often require you to purchase a plan that is more expensive than the minimum coverage requirements in your state. Higher limits of liability and claims for collision and full damages usually increase the cost of insurance premiums.

Another factor that may lead to an increase in the premiums of individual rental vehicles is the maximum deductible limit. The deductible is the amount that your insurance company pays before it starts to pay.

Higher deductible plans usually have lower monthly premiums. If your lessor requires that your deductible is not higher than a certain amount, you may end up paying more insurance premiums if you rent instead of buying a car.

How to Get Insurance for a Leased Car

Generally, when you sign a lease, you agree to meet the insurance requirements for the entire contract period.

Here are the steps to take so that you can provide proof of insurance to the lessor before renting the vehicle:

  • Choose the car that suits you best.
  • Contact your rental company to find out the minimum insurance requirements.
  • Determine if you need other insurance (such as gap insurance).
  • Shop around and choose a car insurance policy.
  • Purchase insurance and have your insurance company send you or your rental company’s insurance certificate via email or fax.

You can do this by phone or online, at the dealership or in advance (if you know the exact vehicle identification number of the car you want to rent). Provide proof of insurance to the rental company, sign your lease, and enjoy your new car.

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