Who doesn’t love driving a brand new car? The new car smell alone is enough for me to want to buy a new one! Leasing a car is a good option if you want to preserve your cash. With interest rates so low, leasing has becoming a more popular thing to do.
Another great thing about leasing a vehicle is that once the lease is over, you can just hand over the keys to your dealer, minus any overages. It is sometimes a big pain to sell your car once you’re done with it.
Below are six things you should know about a car lease and car insurance. The name of the game is to save money by getting the best lease and cheapest insurance possible.
Facts About Insurance For Leased Cars
Leasing a car is a convenient way to get more car for less money. But that doesn’t mean you can skimp on auto insurance – in fact, a lease may require you to buy more even coverage. Since the leasing company owns the vehicle, it wants to protect its investment in case you’re in an accident or your car is stolen.
Before you lease your next car, here are a few things to know about car insurance for leased cars.
1. Coverage is mandatory
Before you drive off the lot in your new car, make sure you’re covered. If you don’t already have car lease insurance to transfer to the new vehicle, you’ll need to buy it before you leave the dealership or leasing office. Most states require some minimum level of liability insurance, and your leasing company may require more than state-minimum levels. Find out more with our Auto Insurance Coverage Guide.
2. Your limits may be higher
Leasing companies often require high liability insurance limits for your leased car. Some may require you carry a lower deductible too, or make you put money in reserve for the duration of the lease if your deductible is higher.
3. Collision and comprehensive may be required
In addition to the basic liability insurance for leased cars that is mandated by most states, you may be required to carry collision or comprehensive car insurance, too. Collision insurance pays for damage to your vehicle if you hit someone’s car, another vehicle hits you or your vehicle rolls over, regardless of who is at fault. Comprehensive coverage helps pay for damage to your vehicle from events other than a car accident, like theft, vandalism, and certain natural disasters.
4. You’ll need to pay for original replacement parts
Some leasing companies stipulate in the lease agreement that if any repairs are made as a result of a comprehensive or collision claim, you must use only Original Equipment Manufacturer (OEM) parts, which are often more expensive than after-market parts. Fortunately, there is a low-cost option available with most car lease insurance policies that covers the difference between the cost of factory parts and generic parts.
5. Gap insurance can protect you
Gap insurance provides extra protection in addition to your basic car insurance for leased cars. If your leased vehicle is stolen or totaled in an accident, this optional coverage fills in the gap between the lease amount still due on the vehicle and what your insurance company would pay for a regular collision or comprehensive claim. Learn more about gap coverage and how it could protect you.
6. There are still ways to save on your car insurance
If you insure multiple vehicles with the same company, or if you bundle your car and homeowner’s insurance, you may qualify for substantial discounts on automobile insurance. If your driving record is clean of any accidents, or if your new vehicle comes equipped with an anti-theft device or passenger restraint system, you could save even more depending on where you live and on your insurer.
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