- It’s a myth that auto insurance for a leased vehicle is more expensive.
- A leasing company has a vested interest in your car, and they’ll be listed on your policy.
- Often collision and comprehensive coverage are not optional when you lease a vehicle.
Debunking the most common misconception about auto insurance on a leased a car.
There are many myths about auto insurance. When it comes to coverage for leased vehicles, there’s one in particular that stands out: auto insurance for a leased vehicle is more expensive than it is for the same vehicle that is not.
The reality is it doesn’t matter. When everything else is the same (coverage options chosen, limits, and deductibles), your insurance rate for a leased car will be the same as the premium charged if you bought the car outright or financed it.
How the vehicle is paid for doesn’t matter when determining your auto insurance premium. It does matter, however, when your insurer is writing up your policy.
Wait, what? What’s the difference?
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Auto insurance for your leased vehicle
When you lease a vehicle, you’re really renting it long-term. You don’t really own it until the end of the lease, and only if you decide to buy it out. As a result, the leasing company has a vested interest in your car. For this reason, an insurer will ask you if the vehicle is leased when you’re getting a quote or securing coverage. It’s to ensure that the leasing company is listed on your policy.
What this means throughout your lease is if you change your coverage choices, limits, or deductibles, your insurer will let your leasing company know of the changes made. And if your policy is cancelled (by the insurer or by you), your leasing company will need to be provided with this information too.
Why does the leasing company need to know all of this information?
If you look over your leasing agreement, chances are you’ll find that there are minimum limits required, as well as coverages. For example, the leasing company likely requires that your policy includes both collision and comprehensive coverage.
Usually, these coverages would be optional, but they’re often not if you lease or finance a vehicle. This is to ensure that damage is repaired should you be involved in a collision or if the car is vandalized or stolen. The leasing company may also cap the maximum deductible you can set for these coverages, often to the tune of $1,000.
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