“`html

Essential Insurance Information for Leased Cars

Nearly everyone needs car insurance if they drive, regardless of whether they’re financing or leasing a vehicle. However, leasing companies generally have stricter insurance requirements than lenders, so you’ll likely need more types of coverage and higher policy limits if you lease a vehicle. Here’s what you need to know.

What Insurance Do You Need for a Leased Car?

The types and amount of coverage you need depend, in part, on where you live. Drivers must meet their state’s minimum insurance requirements, plus any additional requirements the leasing company has.

State Requirements

Auto insurance requirements vary by state. Nearly every state requires drivers to maintain liability coverage, and many states have additional requirements. Here are some common coverages you may need depending on where you live:

• Liability: Covers injuries and property damage you cause to someone else or their property. Leasing companies often require higher liability limits.
• Uninsured/underinsured motorist: Covers injuries and damage if an uninsured or underinsured driver hits you.
• Personal injury protection (PIP)/medical payments (MedPay): Pays for accident-related injuries, no matter who is at fault.

Leasing Company Requirements

Since the leasing company maintains ownership of a leased car, they usually require additional coverage to protect their financial interest in the vehicle, including:

• Collision: Covers accident-related damage when you’re at fault.
• Comprehensive: Covers theft and non-accident-related damage.
• Guaranteed asset protection (GAP): Reimburses the leasing company for the difference between your remaining lease balance and the market value of your vehicle if it’s declared a total loss.

Are Insurance Requirements Different for a Purchased Car?

It depends. You must maintain at least the state’s minimum coverage requirements whether you lease or buy your car. Lenders typically require comprehensive and collision coverage if you’re financing a vehicle, but they don’t usually require higher liability limits or gap coverage.

How Much Does It Cost to Insure a Leased Car?

Car insurance costs vary based on multiple factors, including the type of car you drive, how much you drive, your age, driving history, and where you live. Insurance policies generally cost more for expensive vehicles, drivers who put more miles on their cars, less-experienced drivers, and people with violations on their record. Rates also vary by location and tend to be higher in areas with higher rates of accidents, theft, vandalism, and weather-related damage.

Is It More Expensive to Insure a Leased Car?

Many factors affect the price of an auto insurance policy, but whether you lease or buy a vehicle isn’t one of them. However, because leasing companies typically require drivers to buy more coverage and have higher policy limits, you’ll generally pay more to insure a leased vehicle.

Good Credit Can Help Lower Insurance Costs

Credit-based insurance scores help insurers determine the likelihood that a policyholder will file a claim. Most states allow insurers to consider your credit history when determining the price of a policy. A good credit score may help you get a lower rate in states where insurers can include credit-based insurance scores in their rating criteria.

How to Get Car Insurance for a Leased Car

Purchasing car insurance for a leased vehicle is similar to purchasing coverage for a car you’re buying. However, lessors generally have a few additional conditions compared to lenders. Follow these steps to get coverage that satisfies your leasing requirements:

1. Talk to the leasing company to find out what types of coverage and policy limits they require.
2. Decide on the coverage you want to buy and your policy limits. You can opt for additional coverage and higher limits than the lessor requires—but not less.
3. Get multiple quotes to find the best deal.
4. Choose a policy that best fits your needs and budget.
5. Include the lessor as an additional insured and loss payee on your policy.
6. Provide proof of coverage to the lessor when you sign the lease agreement.

The Bottom Line

Purchasing auto insurance for a leased vehicle isn’t much different from purchasing coverage for a car you’re financing. You must maintain enough coverage to meet your state’s minimum insurance requirements and the conditions of the leasing company. You can choose to buy additional coverage for greater protection, but you can’t have less.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you with confidence and expertise.

“`