Leasing a used car comes with its own set of insurance needs and requirements. And it’s essential to your car buying success to understand the intricacies of what is required to ensure you have the correct insurance coverage for your leased, used vehicle.
At Drivrz Financial, we understand how busy and crowded the roads can be when you’re driving around Florida. This is why we’ve put together our breakdown on understanding leasing and GAP insurance, so you know what to think about before you sign on the dotted line.
What Kind of Insurance Do I Need on a Leased Car?
When you choose to lease a used car, the insurance coverage requires you to have the bank or leasing company named an insured party. This is because the lessor owns the vehicle you’re leasing until you pay off the loan, so that also allows them to require certain levels of insurance coverage for your car.
You will be required to have comprehensive and collision insurance coverage, and you can’t just have the minimum coverage levels in Florida. Your used car lease contract will have within it a clause that states the level of comprehensive and collision insurance you need to carry while you’re leasing the vehicle.
Another type of insurance coverage option you should always consider getting whenever you’re financing a used car lease. And that is GAP insurance.
What Is GAP Insurance?
This is insurance that covers you for the vehicle’s depreciation compared to the amount you’re borrowing. The moment your car leaves the lot, it decreases in value. However, it’s not as much as when you buy or lease a new car with a used vehicle lease.
In many cases, the leasing company you finance your vehicle lease will build in GAP insurance coverage on your monthly payments.
It’s critical to your pocketbook to have GAP insurance on your lease because if you were to be involved in an accident, your car insurance would only reimburse you for the market value of your vehicle at the time of the loss.
Your GAP coverage helps you cover the difference between the market value of your vehicle that your insurance carrier pays you and how much you owe the leasing or financing company if something happens to the car.
For instance, your car is stolen, and you call your insurance agent to report the theft. They will then tell you that you need to pay the deductible to the lessor and that you will also have to pay for the lease payoff amount that’s left on your lease. This could be in the thousands of dollars range.
If you have GAP insurance on your used car lease, you would need to pay the deductible, and your GAP coverage would pay the difference.
While you don’t own your leased, used car, you still have to ensure that your insurance meets the requirements for Florida as well as the leasing contract. At Drivrz Financial, we are here to help make your car search more accessible by providing you the financing options you need!
