Car Insurance Needs for a Leased Car

Think you don't need car insurance for a leased vehicle? Think again. You'll need the same basic coverage that you'd get for a car that you own and then some. Here are a few coverage options that drivers of leased vehicles should consider.

Liability Insurance

Nearly every state requires that you have liability insurance to legally drive any vehicle. In case of an accident with injuries, liability coverage will pay car repairs, medical expenses, and even lost wages of the other driver. The leasing company, or bank if you're buying a car, may also require you to carry collision and comprehensive coverage even if it isn't required by the state.

Comprehensive and Collision Coverage

While not required in most states, collision and comprehensive coverage are very important to drivers of leased vehicles. Collision coverage pretty much covers what you would expect it to. If you collide with another vehicle or object, it pays for damage to your vehicle. Collision coverage usually has a deductible, which can range anywhere from $250 to $2,000.

Comprehensive covers losses due to things like fire, theft or vandalism. Comprehensive may also cover a cracked or shattered windshield damaged by rocks or animals, but some companies offer a separate glass policy. There is also a deductible for comprehensive coverage, which can range from no deductible to $2,500.

Here's a simple rule of thumb: the higher your deductible, the lower your premium. If you pay a low deductible, you're going to pay a higher premium for your auto insurance. It is possible to get reimbursed for at least part of the deductible, if the other driver is at fault and your insurance company is able to recover from the other driver's insurance company. To figure out what deductible you should select for comprehensive and collision coverage, you'll want to weigh how much you can afford to pay for repairs against how much you want to pay for your premium. Auto insurance can be expensive, but whether you're leasing a car or buying one, you'll want to make sure that you're adequately covered.

Uninsured/Underinsured Motorist Coverage

Some leasing companies may also require that you purchase uninsured and underinsured motorist coverage. This type of coverage reimburses you if an uninsured or a hit-and-run driver hits you.

Other Forms of Coverage

The leasing company may require GAP insurance to cover any gap between the amount that you owe the dealer and what the insurance company will pay if the leased car is totaled in an accident. It is often included in the lease payments, so you may not need to buy a separate gap policy. Some companies offer excessive mileage insurance, but if you don't need it you'll actually lose money.

Make sure you have adequate coverage for any vehicle you drive, whether you lease, rent, or own. To make sure you have the best car insurance rate, compare car insurance quotes at InsWeb.com.