So, you’ve decided to skip the whole car buying routine, and are instead leasing a vehicle. Well, there are distinct advantages to this choice. For one, it is overall less money you put on the table. For another, leased cars are generally much newer, if not brand new, and they also are a way to drive around a more expensive and fancier car that you maybe would not splurge or even be able to afford as a purchase. And these days, the economics are in favor of a lease, given that rates of interest being extremely favorable for leasing.
When you lease, you get to drive a nice car, for a stipulated period of time, and then hand it back to the dealer when you’re lease is up. But how does insurance work, in such a situation? Is it like when you rent a car, and it is something you get or purchase alongside the car lease? Or is it more like when you’re the owner of the vehicle, and you get insured? The answer is that you must absolutely have lease car insurance for your leased vehicle, and that coverage must be purchased and in place from the moment you start driving the car.
Now, while a lease on a car is a great way to save money, this savings does not apply to the insurance. In fact, a lot of times, having a certain level of insurance is a requisite and part of the lease agreement. Which, if you think about it, makes perfect sense. Since you are not the owner of the vehicle, the company leasing it out has to make sure it is covered in the event of theft of its property or if the leaser gets in an accident. Without adequate insurance coverage, leasing companies would find themselves liable a lot! So, expect to have to get proper coverage, befitting the make, model and newness of the car you’ve chosen to take on and lease.
In fact, while liability of a certain level is a requisite in most states, expect to have to buy and maintain more than the basic, since most leasing companies will have a requirement for liability that exceeds the state mandated minimum amount. You may also have to spring for collision and comprehensive coverage in order to be able to lease a car, since unlike when you’re the owner and can decide to forgo that level of coverage and take a chance, that won’t work as a leaser.