Insuring your leased vehicle

By: Edward L. Blais, JD, CIC

When considering purchasing or leasing an automobile, many people are opting for the

convenience of leasing. Though you never actually own the car, it may be ideal for individuals

who wish to consistently have a new vehicle. 

However, whether you lease or purchase your car, you must buy and maintain an auto insurance policy.

As you begin the process of leasing, the leasing company will require you to purchase collision and comprehensive coverage. These coverages are in addition to those required by law, including liability coverage. 

Collision insurance covers damage resulting from an accident with another car or object. To further protect the vehicle, comprehensive provides protection for covered losses other than Collision, such as fire, theft, and even including a deer strike.

It is important to note that some leasing companies may also require Gap insurance, which kicks in if your car is totaled. If your leased vehicle is damaged beyond repair, there will most likely be a “gap” between the amount you will owe the dealer under the lease agreement and the Actual Cash Value of the leased automobile. 

This “gap” primarily occurs because the insurance company provides protection based upon the car’s Actual Cash Value – the difference between the replacement cost of the vehicle, less depreciation. 

There are many specifics regarding Gap insurance, which can vary from dealer to dealer. Moreover, this coverage may be available under your own policy.

If you are considering an automobile lease or purchase, please contact Blais Insurance at 725.0070 and we would welcome the opportunity to review your options to make certain you are fully protected.