Collision Insurance Requirements for Leased Vehicles When you lease a
vehicle,you are essentially renting the vehicle from the bank. You are
responsible for following all contract details,such as keeping collision
insurance on your vehicle at all times. Check with your bank before changing
policies after your lease is in place---you can suffer financial penalties if
your policy coverage is incorrect x431
v. Collision Coverage A collision policy covers repairs to your leased
vehicle or the cost of a loss to the bank if a loss should occur. This policy is
required during the entire term of your lease. You are also required to use your
collision coverage in the event of body damage to your car before your lease end
and turn in. If you do not fix your damage,the leasing company will---you are
financially responsible for the cost the bank incurs for repairs. Your insurance
policy information must list the leasing company as the loss-payee. As of
June,2010,Lease Guide states that most leasing companies require at least the
following coverage for policy minimums: $100,000 per person and $300,000 per
occurrence for liability insurance,$50,000 minimum for Property liability
coverage. Check with your bank to confirm. Deductibles and Gap Insurance
Deductible limits differ by leasing company. Although your insurance company may
allow you to have as much as a $1,000 deductible,you are required to keep the
deductible at $500 or lower. The leasing bank requires a low deductible because
it is unlikely a person can easily make a high deductible payment in the event
of a major accident. Keeping your deductible low is also beneficial to you---the
last thing you'll want to worry about after a major accident is coming up with
$1,000 for damages,especially if you're unable to work. Consider Gap insurance
if this is not included in your lease contract by the bank launch
x431 v. You may have to purchase Gap insurance separately from your leasing
institution or from an independent provider. If your vehicle becomes a total
loss,your Gap insurance covers the time between remaining payments are due to
your bank and what the vehicle is actually worth in a loss to your insurance
company. This gap can be thousands of dollars. Penalties Expect penalty charges
if you do not maintain the required collision coverage. As the owner of the
vehicle,the bank can take out an insurance policy on the car. This is often very
expensive---much higher than you would normally pay and in excess of $1,000 in
difference between your policy payment and the banks. The bank is in its legal
right to take the vehicle from you if you do not maintain adequate insurance
coverage. If changing companies,make sure you provide your leasing institution
with proof of your new policy coverage.
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