If you’re planning to lease a vehicle, you must get a comprehensive car insurance policy. Some people think that they don’t have to get insurance for a leased car because they don’t own it in the first place. But you need to be insured when you’re driving a vehicle, whether you own it or not. Insuring a leased vehicle is the right thing to do. It will protect you financially in case something happens to the car.
The process of getting a leased vehicle insured is the same as any other type of vehicle. It’s recommended that you shop around to get the best car insruance for you.. There are also other things you need to consider if you want to get the right level of coverage. The tips below will be useful for anyone planning to insure a leased car.
Avoid Lender Forced Insurance
As the name suggests, lender forced insurance is a policy provided by the lender, with the lessee having no choice but to accept. Typically, a lender will force this insurance on you if you let your car insurance lapse. You may also encounter lender forced insurance if your auto insurance policy doesn’t provide enough coverage.
You need to avoid this kind of policy because it only benefits the lender, not you. Also known as force-placed insurance, this kind of insurance is likely going to be more expensive than a policy you can choose for yourself. You can’t expect the lender to get the insurance that will fit your budget.
A lender forced insurance policy typically meets state minimum requirements, plus other types of coverage that the lender thinks would protect him most damage or loss. The cost of the force-placed insurance gets included in your monthly payment. You don’t have a choice but to pay for it because non-payment can lead to default.
To avoid having a lender force you to get the insurance they want, make sure to meet all obligations as far as your car insurance is concerned. This includes choosing insurance that covers the value of your car. It’s also important not to let your policy lapse.
Failure to pay even for just a month can already result in a lender forced insurance. Your lender will know if you’ve let your policy lapse because your insurance company is obligated to tell them.
Consider Insuring an Additional Driver
You may want to consider adding another driver to your car insurance policy. Doing so can save you more money on your premium in the long run. But you need to choose the additional driver well. To help spread the risk in the insurance company’s eyes, you need to select an experienced driver with no history of insurance claims.
You don’t want to choose a driver that insurance companies deem risky. An example would be a young driver or someone working in a field considered dangerous. Adding these drivers may cause drive up your vehicle insurance and cost you more money.
Choose a Car Within Your Budget
The insurance cost depends on the type of car that you’ll lease. You may have your eyes set on a particular car make and model. But the question is, can you afford to have it insured? You need to make sure to lease a car within your budget.
So before choosing a vehicle to lease, it’s a good idea to first determine the cost of insuring such a vehicle. You don’t want to lease a car outside of your budget range. It will help you to avoid overspending on car insurance.
Consider Getting a GAP Insurance
GAP stands for Guaranteed Asset Protection. It is an insurance product that upholds the value of the leased car as new. More people are choosing this insurance product because of its benefits. Keep in mind that the value of car models tends to depreciate heavily during the first two years of using them.
GAP insurance is a sensible policy to have and can save you money. Suppose you get involved in a car accident that will render the car beyond repair. In that case, the insurance company must value the vehicle as brand-new. Otherwise, you will need to shoulder the difference in cost.
Pay Your Insurance Annually
Many people choose to pay their insurance premium every month because they don’t want to spend a high amount upfront. But the truth is, you can save more money in the long run if you choose to pay your insurance premium annually. When you choose to pay monthly, your premium will incur interest.
People who choose to pay their insurance premiums monthly end up paying more for the same coverage that other people choose to pay for upfront. So if you can pay for your premium in one go, you should take the opportunity.
Keep the Vehicle Safe and Secure
Choosing a car with excellent security features provides you with a better chance to reduce your insurance premium. So it pays to choose a car with an alarm, tracking device, immobilizer, and other security features. But you do have to let insurers know of the safety features present in the car when you ask for quotations. Knowing that your car has advanced safety features will give insurance companies more confidence to provide you with a good policy.
Shop Around and Do Your Homework
When you’re trying to insure a leased vehicle, it’s highly recommended that you shop around for the best deal. Don’t settle for the first car insurance company that you’ll see. You need to shop around first by researching the different insurance companies in your area and collecting quotes.
The Bottom Line
Getting insurance on a leased vehicle is a sound financial decision. It may seem like a big commitment, but the rewards make it worthwhile. After all, you can’t put a price tag on peace of mind and security. Getting an insurance policy with sufficient coverage also keeps you safe from lender forced insurance, which can drain your budget.
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