Over the past several years, leasing, rather than buying, cars has become a popular trend. It definitely has its advantages, like getting a new car every couple years, not having to worry about selling or trading it back, and being able to drive a vehicle that you might not be capable of actually buying. Also, by leasing your car, you’ll be covered under the manufactures warranty the entire time you have it, meaning you’ll never have to worry about it expiring on you. However, remember that if you’re leasing your new vehicle, you’ll still be responsible for taking out an insurance policy on it. The amount of insurance you’re required to have may also be much greater than the state minimums or what you would have normally purchased. More than likely, the auto dealer you lease the vehicle from will require that you at least have collision and comprehensive coverage. Collision coverage pays for damage taken to the car from an accident with another vehicle or object, while comprehensive coverage will pay for damage that occurs from any other type of accident or theft. While these will protect you from a major financial disaster, they are required in order to protect the dealer from financial harm. Of course, your state laws or auto dealer may require that you have other forms of insurance as well, such as liability and gap insurance.
What is Gap Insurance
Although it is not available in every state, many people have found gap insurance to be a good investment in protecting themselves in case their car is totaled. In the situation that your car is totaled, you may find that the amount of money that your insurance gives you is not enough to cover the amount owed back to the auto dealer. Why does this happen? Because your insurance company will give you what the car’s actual cash value is worth and your car’s value has depreciated over time. Gap insurance will cover this difference for you, which could be a significant amount of money. You definitely don’t want to be stuck making payments on a car you don’t even have anymore, especially if you’re already paying for a new car. If you’re leasing your car, this type of insurance may actually be included in the lease, but you should strongly consider it if not included. So before thinking about leasing your next vehicle, make sure you’ve got all the required insurance or an accident could be more costly than you could have ever imagined.
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