Since you don’t own the car in a lease agreement, determining how insurance works can be confusing.
Does your lease cover insurance costs? Will you have to pay from your pocket if the car gets damaged? Does insurance on car leases cost more?
One thing is certain. You have to factor in insurance costs when leasing a car, but how do you begin?
Who Pays for the Insurance on a Leased Car?
Although the leasing company owns the car, you are responsible for the vehicle’s insurance. So, factor in insurance when planning your car lease budget.
This sometimes means you have to look for the best insurance yourself. Your dealers may also propose some insurance companies they already do business with.
Leaseloco, for instance, suggests reputable insurance companies to lessees to save clients time. But if you doubt your dealer will provide you with the best deal, look around and compare offers.
How Does Car Lease Insurance work?
Depending on the terms of the particular insurance policy, car lease insurance may cover involuntary employment, damage, or even the death of the lessee.
An instance is if you lose your job after taking the lease. Your insurance policy can cover your monthly payment until you have a new job. Some policies complete the lease payments if death occurs.
What to Look Out For In A Car Lease Insurance Policy
You will get a good deal if you look out for the following when choosing an insurance policy:
It is best to pick a plan that matches the duration of your lease. This can reduce insurance costs since the policy expires with your lease.
Make sure you find the circumstances the insurance policy covers satisfactory. Does it cover death as well unemployment?
If satisfied with the insurance’s circumstances, check the terms accompanying them. For instance, how long do you have to be unemployed to be eligible for compensation?
Car lease insurance comes with exclusions too. Some policies do not cover involuntary employment as a result of ill-health. You may also want to confirm that a death policy covers death caused by pre-existing health conditions.
This factor accounts for the maximum amount you can claim regardless of the event. If the damage on the leased car exceeds this limit, you may have to bear the remaining costs yourself.
Is Insurance for Car Leasing Higher?
Several factors affect the price of a car lease insurance. Some of them pertain to the lessee (such as driving experience, driving history, and age), while the leased car determines others.
The vehicle’s make and model and its specified use are fixed factors, so leased cars are not always more expensive to insure. Experienced drivers can enjoy cheap comprehensive insurance covers.
Your credit rating, the type of car you are leasing, and the type of policy are other factors that affect the price of car insurance.
The extent of coverage determines the insurance price, and leased cars often require more coverage. This is because you can be charged a lot at the end of your contract if your car is damaged, so better to be safe than sorry.
Similarly, drivers who buy their cars will pay just as much for insurance if the policy offers robust coverage.
How Can I Reduce Insurance Costs?
You can enjoy comprehensive coverage yet pay less for insurance. Here are some ways to go about it:
- Consider paying annually rather than monthly. You may notice that you pay more when paying for insurance monthly.
- Drivers sometimes overestimate the miles they will drive to avoid paying for extra mileage. Determine your annual mileage limit based on your history to avoid paying unnecessary insurance costs.
- Add an extra driver on the premium if your driving history is not commendable. An experienced driver will come off as a lower risk, reducing your insurance fee.
- Present yourself as low risk by improving the vehicle’s security. The insurer might issue a discount if you have an alarm fitted and park the vehicle in a secure location.
The more informed you are, the better the insurance policy you get yourself. Compare quotes from different insurers and ask your dealer for recommendations. These steps, coupled with enough knowledge about leased car insurance policies, will win you affordable, comprehensive insurance.