Understanding Lease Insurance Coverage
Signing a lease contract will come with an obligation to get insurance. But that doesn’t mean you need to go into the agreement blind. Here we will go over everything you need to know about lease insurance and how it works.
There isn’t a big difference between regular car insurance and lease insurance. The main difference between the two is that full insurance is mandatory for leased vehicles. This may seem like an unnecessary requirement but we will go into full detail to explain exactly why this is the best thing for both parties.
Why Full Insurance is Mandatory For Leases
Just like car insurance, it’s standard policy to make sure every vehicle is insured. But it’s especially important to have full insurance for leased vehicles as well.
Let’s say you get into an accident and total your lease. You will now be on the hook for the entire price of the vehicle to the dealership. This is why it’s even more important to have mandatory comprehensive insurance for leased vehicles.
In the eyes of the dealer, they want to make sure they get the full value of their car back if there’s an accident. Comprehensive insurance protects you and the dealer completely, making sure both parties don’t get treated unfairly or are left holding a huge bill.
One thing to note here is that your insurance company will need to connect with your leasing company. The leasing company will become a name on your policy because the dealer has an interest in the policy just as much as you do.
This isn’t the end of the story when it comes to insurance, there are still options like Gapp insurance which provides additional protections for you the lease.
Gapp insurance is specifically intended to cover the “gap” between how much you owe on the vehicle and how much it’s worth. Having this insurance will make sure you don’t have to cover the gap if an accident were to occur.
Gapp insurance is not mandatory and will not be included in your comprehensive insurance plan. In some cases the insurance you already have may have a better deal for you than the dealership will offer. Before going to the dealer, make sure you contact your insurance to see what rates will apply to your deal.
There are even private companies that offer Gapp insurance if you don’t want to go through your insurance or your dealer. Do some research and find the best companies in the industry before signing any contracts.
The last thing you need to know about Gapp insurance is that you may already be exempt from making the payment according to the details of your lease agreement. There is something called the “Gap Waiver Provision”
Insurance Pays in the Long Run
You never know what will happen over the course of your lease. Getting fully insured may cost you more, but you will always have peace of mind knowing you are completely protected. Do your due diligence before making a decision, because, as we discussed above, there is more than one way to get the proper insurance.
If you want to speak to someone more in-depth on this topic, make sure to reach out us at Carvoy.com