When you lease a vehicle rather than purchase it, you will often be required to purchase extra car insurance. The state legal requirements will vary, but even after you have purchased the minimum of state insurance coverage, the terms of your lease may require you to purchase additional car insurance coverage. Most leases will require you to purchase at least a minimum amount of both collision and comprehensive insurance in addition to your liability insurance. These types of insurance are normally optional for a new car buyer, but if you are leasing, you can expect to pay more in insurance for that privilege. Your car insurance rate will depend on your insurance company and on your personal driving record. However, it will typically be higher than you would pay if you were to purchase the car. There is also another type of add-on insurance coverage you will probably be required to buy with your lease: GAP insurance.
GAP insurance is usually not part of the insurance rate that you will be quoted for your car insurance policy; it is a type of add-on insurance. You may find that GAP is available through your insurance provider, but it is also typically offered at the time you lease the vehicle. GAP is designed to keep customers from getting into a situation where they lose their car due to unforeseen circumstances and yet still owe more money than they insurance company is willing to pay out for the totaled car. For example, if you have a car that is brand new and you still owe $15,000 on your lease, and that car is later stolen, then the insurance company will reimburse you the assessed value of the car. If the value of the car is just $9000, the insurance company would pay that amount towards the money still owed on the car. This leaves the person leasing the car with a deficit of $6000, which is due to the finance company. GAP insurance fills in the gap between what the insurance company will compensate and what you actually owe.
GAP is a smart choice for a person leasing a car, even if you they not required by their finance company to buy it. This add-on insurance will help you to make sure you are never placed in a situation where you are left with thousands of dollars owed on a car that you will never see again. Most leases require it in an effort to help people meet their financial obligations in case disaster strikes. Add-on insurance can help ensure that a leased car never becomes a major liability for you.
