- October 29, 2020
- Posted by: admin
- Category: Uncategorized
According to studies, car leasing volume in the US grew from 1 million in 2009 to a hefty 4.3 million in 2019. As car leasing statistics were on the rise, the need for lease insurance policies also grew.
Let’s talk about the coverage you get when you get your car insured with a policy that protects your leased car from unforeseen damages.
Are Vehicle Insurance Quotes Different for Leased Cars?
Essentially, auto insurance for leased and owned cars isn’t much different. The only primary difference is that the policy for a financed/leased car will mention the lienholder’s name or that of the leasing company. This is because the leasing company owns the vehicle until the policyholder pays off the loan. To this point, the leasing company has a say in the required coverage.
On the other hand, there is no mention of any third-party financial institution or leasing company in the case of an owned car.
What Are The Coverage Requirements?
The coverage details also differ for leased cars. In the case of a leased car, you don’t have to buy the law’s minimum auto insurance coverage. Instead, you’ll follow the lease agreement. The clause usually requires you to purchase comprehensive and collision insurance coverage. This is the leasing company’s way of making sure that the company will be fully compensated if something happens to the car. It helps the policyholder meet any contractual agreements under the lease if the vehicle meets an accident.
What Is GAP Insurance?
If you’ve ever taken out a lease on a new car, you might have heard of gap insurance. In Massachusetts, this is an add-on to your regular auto insurance policy and is usually offered by the dealership.
Consider this example:
When you drive off the car from the dealership parking lot, its value depreciates. As we advance, if you meet an accident, your insurance company will only pay the ‘actual cash value’ of the damages at the time of the accident. It’ll not pay to replace the car. There is a difference between the two. If this cost is less than the total lease amount, you owe the remaining amount to the bank. In this case, you need GAP insurance (guaranteed asset protection) to help you pay the difference. GAP is an optional coverage in Massachusetts.
Western Mass Auto Insurance is your one-stop solution for all auto insurance-related needs. If you’re in Springfield, Charlie Ross is a leading auto insurance agent, who can help you out. Charlie has over 22 years of experience in helping clients with policies for leased cars.
Learn more about our local car insurance Springfield MA, MA.