When buying a vehicle, your lender will require that you have comprehensive auto insurance on it. This provides a safety net for the lender. If the vehicle is a total loss, such as after a fire or a theft, the insurance plan helps to cover the loss. When leasing a vehicle, you may have the same requirements, or those that are similar. Those who lease a vehicle never fully own it outright, making it even more important for you to maintain the most appropriate and effective car insurance plan.
What Types of Auto Insurance Must You Have?
When signing a lease for a vehicle, the company will outline what your specific requirements will be. In most situations, you will be required to maintain the following types of coverage:
- Comprehensive insurance. This pays for damage resulting from incidents such as storm damage, flooding, hail, fires, and theft.
- Collision insurance. This type of insurance helps to pay for damage to the vehicle that occurs when you are involved in a collision that you caused, such as backing into a pole or hitting another vehicle.
- Liability insurance. You will need to have at least the state required minimum liability insurance. The lease holder here wants to ensure you are operating the vehicle legally. Liability insurance offers no protection to you or the lease holder, but to other drivers when you cause damage to their person or vehicle.
Is that enough? It’s often advisable to have extended liability insurance since most state-required levels are very low and often not enough to pay for the damage resulting from a single incident. In addition to this, you may also need to carry under-insured and uninsured plans, medical payments, and coverage for any special equipment. You may also need gap insurance. It is nearly always more affordable to purchase gap insurance, often required by lease holders, from an insurance agency rather than buying it directly from the leasing company.
The right amount and type of insurance coverage can save you a great deal of money. And, it offers the protection you need to safeguard against risks that could occur while you are operating your leased vehicle. Ensure your policy meets all standards required under your lease agreement.
Call Buschbach Insurance Agency at (708) 423-2350 for more information on Chicago IL auto insurance.