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You need the minimum amount of insurance required by your state when leasing a car, in addition to any extra coverage your lessor may require. Sometimes, lessors will require collision and comprehensive insurance to cover the car, as well as gap insurance to cover your lease payments.
Insurance Needed on Most Leased Cars
- State-mandated coverage. In most states, you must have both bodily injury liability coverage and property damage liability coverage. In some states, you may also be required to have uninsured/underinsured motorist and personal injury protection coverage.
- Extra liability insurance. Some lessors will require higher liability limits than your state – bodily injury coverage of up to $100,00 per person ($300,000 per accident) and $50,000 for property damage, for example.
- Collision insurance. Some leasing companies will require collision insurance to cover the risk of damage to a leased vehicle. Collision insurance pays for damage to your vehicle caused by a collision with another car or an object such as a tree or fence.
- Comprehensive insurance: Leasing companies will want to protect your vehicle from non-collision incidents and may require you to take out a comprehensive insurance policy. Comprehensive coverage pays for damage to your vehicle caused by something other than a collision.
- Gap insurance: If you are leasing a new car, the lessor will likely require you to take out a gap insurance policy to cover the difference between what you owe on the lease and the actual value of the car if it is totaled. Or, your lessor may instead require that you purchase loan/lease payoff coverage, which is used to offset up to 25% of the outstanding balance on a car loan or lease.
To learn more, check out WalletHub’s guide to how much car insurance you need.
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