Insurance on a Leased Car – all you need to know!
When it comes to leasing a car, there are many questions that you’re likely asking yourself. If you lease your car and your insurance is under the vehicle’s value, how will that work? What happens if the car gets totaled or stolen? Do I have to pay for additional damage to my leased vehicle? And what do I need in order to get a loaner from my insurance company if I need one?
Only after knowing answers to all of these questions, you can be confident while shopping for your next leased ride! Come on! Read our post about insurance on a leased car – all you need to know.
Does value of car matter for leasing?
Leases are essentially like renting a car, but they include any liability that could be incurred in the event of an accident, theft, or vandalism. Because of this, most people lease their cars through third parties such as banks or credit unions.
Since your lender is providing you with financing for the vehicle, they have to be aware of any risk that could occur if you wreck your new set of wheels. Therefore, they will require proof that insurance will cover any extra liability that may arise while you’re driving their property. To do this, they’ll require collateral coverage above what’s on a normal auto policy.
Collateral coverage is an insurance policy that covers your leased car’s liability up to the value of the car itself. This works by taking what’s owed on the lease and adding it to the value of the car. If this number is higher than the standard insurance liability limits of $50,000/$100,000, then collateral coverage will kick in to cover whatever amount isn’t covered by your personal auto policy.
What happens if my leased car is totaled?
One big concern with leasing a vehicle is that you won’t be able to keep up with payments if something goes wrong. Fortunately, there’s not too much risk in that area as long as you act quickly after an accident can occur.
If you have collateral coverage on your leased vehicle, it will cover the difference between what your auto insurance pays and the remaining cost of your lease. However, if you are unable to pay the remaining value of a lease, then your lender may take legal action against you to recover their losses.
What happens if my leased car is stolen?
If someone were to break into your garage and steal your new Dodge Challenger SRT Hellcat, then it’s likely that no insurance company would want to help you with getting a replacement. This leaves many people wondering what would happen if they had collateral coverage on their leased car.
While most people might assume that the vehicle would be deemed totaled, there are actually a few cases where this may not be the case. This may very well depend on the type of lease you signed and how much information was requested from you at the time of signing your contract.
Obviously, you want to make sure that the seller is honest and reliable before you sign any contract. It’s never a good idea to sign a contract with anyone who isn’t willing to show proof of insurance or collateral coverage on their vehicle.
What happens if my leased car gets damaged?
Collateral coverage will be on top of your auto insurance policy as long as your loaner is available for use. This means that your total loss for the car is covered by your personal insurance as long as you have it on you.
This also means that you won’t need to take a loaner from your lender in order to get to work. You may still need to contact them immediately. If this happens, you’ll have to find out how long they’ll hold onto the vehicle, and whether they’ll expect additional payments on the lease.
As we mentioned before, collateral coverage isn’t going to cover everything. It will just cover up until the point where your insurance coverage would otherwise cover your losses. This means that you may end up paying for some of the damages with your own pocket.
What do I need to get a loaner from my insurer?
If you need to get a loaner from your insurance company while you’re renting a car, they’ll likely require that you call them sooner rather than later. This way, they know exactly what happened so they can verify the damage and coverage which is supposed to have been available through your lease contract. It’s also important to inquire about its value as soon as possible.
If your insurer is unable to provide you with a loaner, you may need to hire one of the companies below. However, if your lease contract is under a certain amount, the insurer may be willing to pay for the loaner.
These are just some of the first steps that you'll want to take if you have collateral coverage on your leased car. It's important to consider what the exact terms of your lease will be if you're ever in an accident. However, most people should be able to get a loaner from their insurance company if they need one after an accident.
If you’re interested in learning more about collateral coverage and leasing a car, please don’t hesitate to surf on the internet.