INSURING A LEASED CAR
Understanding Your Car Insurance Responsibility On Leased Vehicles
If you lease a car, you'll still need to purchase your own states mandated basic auto insurance and since most states by law only require liability only, you'll very likely need additional coverage:
Leasing companies require both collision and comprehensive auto coverage
The business financing your leased car has a monetary interest in the vehicle. Because of that hey’ll want to make sure their investment is protected so that in the case of an accident they can be made whole. For that reason, you'll need to buy:
Collision insurance to cover the damage to your leased car from an accident with another automobile or object.
Comprehensive insurance to cover a loss to your leased auto caused by something other than a collision, such as a fire or theft.
You'll also likely be paying for gap coverage
We all know how the price instantly declines as soon as a car is driven off the lot, cars depreciate very quickly. If your leased car is totaled in an accident, there likely will be a difference between the amount that you still owe the dealer/financial institution and the amount you'll receive from your insurance company for the depreciated car. The difference between the two amounts is known as the "gap".
On a leased car, the cost of gap insurance is usually part of the lease payments. The auto dealer sometimes buys a master policy from an insurance company to cover all the cars it leases and charges you for a "gap waiver." Financial institutions do something similar as well, this means that if your leased car is totaled, you won't have to pay the dealer the gap amount. Check with the auto dealer when leasing your car for specifics that apply to your leasing contract.