Do You Need Insurance When Leasing a Car?
Those who are new to car leasing tend to have the misconception that car leasing does not require any insurance. Many think that the responsibility for obtaining the insurance policy falls on the car dealer or the company leasing the vehicle. This is not how it works, though. If you are thinking of leasing a car, your concern is not only how to find the cheapest lease deals. You also have to think about getting auto insurance.
Car lease insurance required
The insurance policy needed when leasing a car is not vastly different from the insurance required for a fully-owned vehicle. The only notable difference is that in leased car insurance, the name insured is the name of the leasing company. This is similar to obtaining coverage for a financed vehicle, wherein the name of the insured party is that of the lien holder.
It is necessary to get auto insurance even for a car that you don’t own as long as you are the one considered to be the primary user of the car. Being the lessee is equated to being the owner of the vehicle as far as insurance is concerned, even though it’s only for a limited period. Lessees have to comply with minimum auto insurance standards.
In the UK, the insurance to obtain for a leased car should be a fully comprehensive policy. It has to be purchased before the day the vehicle is delivered to the lessee’s place because proof of insurance is usually required before the delivery can be completed.
Is GAP insurance needed?
GAP stands for Guaranteed Asset Protection. When it comes to leased vehicles, it is not compulsory. It is an optional insurance policy that covers the difference between the value of the vehicle and the amount owed by the lessee to the leasing company. The value of the vehicle, by the way, is the amount the insurer commits to pay in the event the car is totalled or stolen.
Who gets the insurance reimbursement or payment?
As mentioned, it is the lien holder or leasing company that is named as the insured. Hence, if there are reimbursements or insurance payments, the amount would go to the leasing company, the legal owner of the vehicle.
Keeping insurance costs low
To minimize the cost of insurance, be sure to compare your options carefully. You are not obliged to choose the insurer referred by the leasing company. Feel free to get insurance from independent providers after making comparisons. Also, it is advisable to pay the insurance policy on a yearly basis. Paying the insurance cost for an entire year upfront can be cheaper compared to doing it monthly. Moreover, it can help in lowering premiums if you include an additional driver in the policy.
Most lease contracts do not include auto insurance. As such, you have to get the insurance policy on your own. Take note of the discussions above to make sure that you are getting the most cost-efficient insurance for your leased vehicle.