Are you thinking about leasing a car but worried about how much you’ll gonna pay for insurance? You’re not alone. That’s because getting insurance for a leased car is often more expensive than if you own the vehicle.
On average, a car insurance premium for a leased car can cost about $275. On the other hand, if you own a car, you’ll pay about $156 per month.
There are many benefits to leasing a car compared to paying monthly installments if you own one. However, one of its biggest downsides is the higher cost of insurance for a leased car.
The big question now is, why does leased car insurance cost more? In perspective, leasing companies require different car insurance policies that could influence the cost. But this is not something that leasing companies decide on their own.
These insurance requirements vary according to the type of car you’re driving, the driver, or by state. Oftentimes, leasing companies require both collision and comprehensive insurance. Moreover, they would also ask for other coverage, demand higher coverage limits, and maximum deductible.
In addition, a maximum deductible amount of money that you will have to pay in the event of an accident is also required by some leasing companies. If you’re not familiar with deductibles, it’s the amount that you’re responsible to pay out-of-pocket before your insurance policy kicks in.
The standard deductible amount is usually $500, but for leased cars, it could be as high as $1,000. And if you have an accident, you will be required to pay the deductible amount first before your insurance policy covers the rest of the damages.
There are ways to get around these extra costs. The best way is to shop around and compare car insurance quotes from different providers. This way, you can find the best deal that fits your budget.
You can also ask the leasing company if they’re willing to lower the insurance requirements. However, keep in mind that it’s not always possible to get around the high cost of insurance for a leased car.
Who pays insurance on a leased car?
The lessee, or the person who is leasing the car, is responsible for paying insurance on a leased car. The insurance requirements and the amount that needs to be paid will be stipulated in the lease agreement.
In most cases, the minimum liability insurance is required by law. However, some states may have different requirements. For instance, New York requires that all drivers must have personal injury protection and no-fault insurance.
On the other hand, Michigan only requires that all drivers must have property damage liability insurance. As for leased cars, the minimum liability insurance is not enough.
Leasing companies would require additional coverage, such as collision and comprehensive insurance, to make sure that their investment is protected in case of an accident.
What happens when you drive a leased car without insurance?
If you’re caught driving a leased car without insurance, the penalties can be severe. For instance, you may be required to pay a fine, have your driver’s license suspended, or even be sent to jail.
In addition, the leasing company can also terminate your lease agreement and ask you to return the car immediately. They can also sue you for any damages that may have occurred while the car was uninsured.
To avoid these penalties, make sure that you have the required insurance coverage before driving your leased car. If you’re not sure what type of insurance is required, ask your leasing company or check your lease agreement.
In Conclusion
Leasing a car has its own set of benefits and drawbacks. One of its biggest disadvantages is the higher cost of insurance for a leased car. This is because leasing companies require different car insurance policies that could influence the cost.
The best way to get around this is to shop around and compare car insurance quotes from different providers. You can also ask the leasing company if they’re willing to lower the insurance requirements.
However, the bottom line is to make sure that you have the required insurance coverage before driving your leased car.
If you’re not sure what type of insurance is required, ask your leasing company or check your lease agreement.
Driving a leased car without insurance can result in severe penalties like fines, license suspension, and even jail time. To avoid these penalties, make sure that you have the required insurance coverage before driving your leased car.
