There is a significant difference between owning a car and leasing a car. If your life situation calls for a car leasing agreement, and if such a contractual obligation is uncharted territory, you may wonder what this sort of agreement entails exactly.
The most obvious difference between buying and leasing is that the leased vehicle isn’t yours; you are merely renting it from a car dealership or some other entity, usually for a period of two to four years.
Besides that fact, however, there are a few more important factors to consider between leasing and buying.
One particularly major factor is the matter of car insurance.
But the question then lies, who holds ownership over leased car insurance? Are there specific car insurances for leased cars? How much does leased car insurance cost? What happens if I need to claim damages?
If you’re currently unsure about the whole thing, don’t worry, we’ll break it all down for you in this article.
Is Car Insurance Necessary?
Car insurance is a mandatory requirement for all vehicles that drive on public roads and highways in Australia, the United Kingdom, and most countries.
In Australia, this insurance is called Compulsory Third Party (CTP) insurance. The UK also pegs third-party cover insurance as their minimum required car insurance.
Who’s Responsible for Paying Car Insurance?
As the driver and primary user, it’s your responsibility to put up a sufficient car insurance coverage plan for the leased vehicle. This will cover the day that the vehicle has been brought to you and the day you’re returning it to the registered owner.
In most cases, you don’t have to accomplish the task of acquiring car insurance alone. The leasing company usually requires you to purchase the car insurance plan before they lease out the vehicle. This way, you’ll both be on the same page regarding the coverage and policy.
How Much Does Leased Car Insurance Cost?
It’s in the nature of leased cars to switch hands every so often. Moreover, the registered car owner (the person leasing the car) will still want the car to be in good working shape once you return it.
To mitigate this additional risk, leased car insurance costs slightly more than fully-financed car insurance. The bulk of this additional expense comes in the form of a more comprehensive insurance policy. However, the profile of the buyer is also taken into account.
It’s usually the case that people who lease cars are younger and more reckless. This can increase the price of car insurance slightly more.
Besides the aforementioned factors, the cost breakdown of a leased car and a financed car don’t differ that much. Just like financed vehicles, the value of the leased car insurance will be dependent on the car’s make and type. Typically, the insurance cost will be directly tied to the vehicle’s purchase price.
What’s Included in The Car Insurance?
The leasing company will want to protect itself in case the car gets into any accidents or is stolen. Therefore, they’d like to be covered extensively in the case of any damages.
To serve this purpose, a leased car insurance plan typically includes comprehensive coverage and collision coverage as the bare minimum.
Comprehensive coverage helps cover the car’s cost in the event that it gets stolen, vandalized, or hit by a falling object. On the other hand, collision coverage is responsible for covering any repair expenses incurred from a car accident.
Additional inclusions include liability insurance, gap insurance, and rental car reimbursement coverage. It’s a good idea to protect yourself and take these suggested add-ons, even if they may cost extra. Depending on the leasing company’s own terms, these add-ons may be requirements for acquiring the car.
In any case, be sure to do proper research and find a leased car insurance policy from quality providers like ROLLiN’ Insurance to get financial peace of mind regarding your leased car.
How Do I Pay For My Lease Car Insurance?
Ultimately, this will depend on what’s required by the insurance provider. But usually, leased car insurance providers offer different payment plans.
You may pay a lump sum payment for the whole year or split it into monthly payments. In some cases, you can also pay per usage if you’re only leasing out the vehicle for a few days or weeks.
You can save more money by opting for a whole year’s worth of payment due to the lesser interest rates. But if you’re in a bind and can’t commit to such payments, monthly options are beneficial too.
How to Claim Damages For a Leased Vehicle
Just like a traditional car insurance policy, you can lodge a claim if your car gets damaged, stolen, or vandalized.
These are the steps you’re required to take to get this done:
- Gather all information on the accident, including the details of the other driver and the contact info of witnesses.
- Double-check what you can claim with your leased car insurance plan.
- Make a claim based on your insurance provider’s terms. If you have a specific point person, give them a call.
- Contact the leasing company to fill them in on the state of their car.
- Once all the information has been presented to the insurer, they will contact you within two weeks regarding the status of your claim.
Whatever the case, always remember to be safe on the roads and take necessary precautions when driving a leased car. That way, you can stay protected from any unforeseen events. Preventing any accidents is always better than being in one.
