Leasing a used car is a great way to get a top-quality vehicle with lower monthly payments than leasing the same brand-new model. And like with any car you buy or lease, you will need to get it insured no matter what state in the U.S. you live in.
Every state has its own minimum required coverage to drive legally, and there are also coverage requirements for your lease contract that you must be sure you adhere to. Fortunately, navigating that confusing situation is easier, thanks to your friends at Drivrz Financial!
Today, we’ve put together this quick guide on how leasing a used car affects your insurance and the type of coverage you will be required to have on your policy.
Coverage Required by Law
No matter what state you live in, there are legal requirements for the coverage you need. The most significant difference in insurance state by state are the minimum requirements on your coverages. These are the coverages required by law:
Most states require every driver to carry a minimum amount of liability coverage on their policy. This helps pay for someone else’s expenses should you cause a car accident that ends up injuring them.
Uninsured Motorist Coverage
This coverage also includes underinsured motorists, and this type of policy requirement is different depending on where you live in the United States. For example, it covers you if you’re hit by a driver who doesn’t have car insurance and need medical treatment.
How Leasing Affects Your Insurance
Leasing a used car requires a few different types of coverages that vary by lender but are still part of the insurance premiums you’ll have to pay while you’re leasing the vehicle. Every lease requires GAP coverage, which will reimburse the lienholder if you get in an accident and the car is ruled totaled. GAP coverage pays for the difference in the vehicle’s value versus the remaining amount of your loan or lease.
You need GAP coverage because the company that finances your leased, used car is the one that actually owns it, and they will want to protect their financial interest in the vehicle. They will also require two other types of coverage on the car:
This coverage helps you pay for the car’s repair if you hit another vehicle or object, no matter who’s fault it is.
This coverage pays to repair the car if it’s damaged by anything outside of a collision, such as theft, vandalism, or even a falling object.
Whatever type of used car you’re looking to lease, be sure that you take the time to find out from your insurance provider how it will affect your insurance costs every month. As always, Drivrz Financial is here to help with all of your financing needs!