Do I need insurance for a leased car?

There are many people who lease a car for a short duration to meet a particular requirement. Sometimes, we lease a car when we are traveling out of town or when we are in a different city. So if you are planning to lease a car then you will require an auto insurance policy. Whether it is your own car or a leased car, auto insurance coverage is a must. If you are leasing the car from a particular auto dealer, then you will have to buy a collision and comprehensive coverage at the minimum. Apart from these coverage's, you will also have to buy the auto insurance policies that are mandatory in your state.

According to recent developments, it is now mandatory to have auto liability insurance before you can legally drive a car. Liability insurance will pay the medical and repair cost to the other party if you cause any accidents or are at fault. All states have now strict laws that have set a minimum amount of insurance required by drivers to pay for any damages caused due to their negligence behind the wheel if any accident occurs. This is applicable for both owned cars and leased cars.

If you are driving a leased car, then your collision coverage will provide financial help if your car is damaged due to an accident caused by another vehicle or object. The comprehensive coverage will include loss or damage caused by anything other than a collision with another vehicle or an object. The comprehensive coverage is targeted at providing financial relief if your leased car is damaged due to fire, theft or even a collision with a deer.

The leasing company will require gap insurance. Gap insurance is useful especially if you meet with an accident where your leased car is damaged permanently or beyond repair. Since you have taken a leased car, you will owe a certain amount to the lease company and at the same time, the insurance company will provide for damages on your leased car. The difference of the amounts is called Gap. The insurance company will pay for damages based on the cash value of the car and take into account the depreciation since the time you leased the car.

If you are driving a leased car, then the cost of gap insurance will be rolled into lease payments. In reality, you will never buy a gap policy. It is the auto dealer who will buy a master policy from an insurance company so that the policy can cover all the leased cars and charge you for a gap waiver. This basically means that if your leased car is damaged beyond repair then you won't have to pay the dealer any gap amount. Always check with the lease car dealer before picking up a car. Another point to note is that gap insurance is not available in some of the states.

The bottom line is that before you lease a car; find out more information from the car dealers about gap insurance and how the damages will be taken care of if there are any accidents.