For some, it seems smarter to lease a car than purchase it. People that lease their car won’t own their car at the end of their contract. They may have the option to buy but don’t have to. When a person leases a car, they are essentially borrowing a car from the leasing company and will return it after a specific period of time. When people choose to lease a car, they still have to have car insurance to protect themselves from financial burdens if they have an accident.
When leasing a car, some leasing companies will offer their own insurance to their customer. Some of these insurance options are wonderful and should be taken advantage of. There are other times these packages are expensive and unnecessary. Instead of depending on the leasing company to provide the insurance, people can find an insurance company to purchase insurance from.
The Right Insurance for Leases
People that choose to lease their car still have to have insurance on that car. While they may not own it at the end of their contract, they still have to protect it while they have it in their possession.
Most major car insurance providers are happy to provide insurance for a leased car. The insurance options are still the same and many of the discounts are still available to people that lease their car. One of the biggest differences in what is offered is called GAP coverage. GAP coverage is guaranteed auto protection and many leasing companies require their customers have it within a specific amount of days of leasing a car.
What is GAP?
Gap coverage is an insurance police that covers the difference between the value of a car and how much a person owes on the car. After leasing a car, the car can be totaled in an accident. Many drivers are surprised to find the difference between the car’s value is much different than what they owe the leasing company.
A leased car is a borrowed car and the leasing company wants to protect their assets because they may be able to lease it to someone else or sell it for a high price at the end of the contract. Most leasing companies offer their customers their version of GAP insurance because many first time leasers don’t know anything about it. While accidents are unfortunate, a leasing company wants to get as much money as they can for the vehicle they won’t be able to sell or lease to someone else.
The GAP insurance that is offered through a leasing company is often a bit more expensive than the insurance offered through a traditional auto insurance company. People that choose to lease should take the time to research the cost of GAP insurance through their insurance company. If it’s available, do the math and pay for the best policy.
Not everyone needs to pay for GAP insurance so it’s not something that is talked about all the time. When a car is leased or financed, GAP insurance is one of the best add-ons available because it’s extra protection from financial burdens if an accident happens.