We sometimes get asked by clients to comment on the above. When you lease a car, the leasing company still really owns the car, but the general requirement is that you, the lessee, buy the insurance and that you name the leasing company as an additional insured on your policy. Insurance companies will do this and generally don’t charge you any more than they’d charge if you owned the car outright.
Where you might pay more is that your lease will probably specify the amount of insurance you are required to carry. Leasing companies typically require you to carry more liability insurance than just the minimum amount your state requires. They also limit the size of your deductible. Really large deductibles are usually forbidden in leases.
People who lease should consider lease gap insurance. This coverage can save the day if you total out the car and collect less for it than your lease pay-off amount. This can be a real problem early in your lease when depreciation usually devalues the car at a faster rate than your pay-off amount is decreasing. Lease gap coverage pays the difference between the pay-off amount and what you were paid based on the car’s value at the time of the loss.
You can buy lease gap coverage as part of your regular auto policy. Leasing companies usually offer this, too and roll the cost into your monthly payment. You should compare costs before you buy. There could be several dollars per month difference between the two choices.
Blog Authored by: Ken Mogren, CPCU