How Does It Affect Auto Insurance - Buying or Leasing
Introduction:
Having our luxurious car is what most of us dream of. But the price tag that comes along with it is something that we all dread. So, we either think about leasing or buying a car. Both of them have their pros and cons. While some people in Corpus Christi feel that leasing a car is a better option, others believe in owning one.
If you are amongst those who have saved enough money to buy a car, then congratulations! You are capable of purchasing one from your pocket. On the contrary, leasing a car is better if you are amongst those whose monthly earned income goes into paying debts. Now that you have decided which car to buy, the next thing that might come to your mind is how will it affect my auto insurance?
Auto insurance in Texas is something that we all are aware of. But, do you know exactly what an auto insurance policy covers in case of buying or leasing? Don't worry! With this article, you will get a clear understanding of the same.
How Much Coverage Do I Need and Who Decides the same?
Whether you choose to go for financing the car or lease the same, your insurance lender will mandate to have additional coverage in both cases. However, the type and amount of coverage may differ as per the lender's requirement. The collision and comprehensive coverage come as a priority when leasing or having a loan on your car. If your vehicle is totaled, this coverage will pay for the damages (minus the deductible).
On the other hand, if you own your car outright, collision and comprehensive coverage are not mandated by the law. But, it is always advisable to go for them as they will protect you from any significant financial setback in case of an accident. Also, the insurance-providing company will rest assured as they know that their interest is being protected.
The type and amount of coverage required will further depend on your car's make, model, and value. However, since the owner doesn't get transferred in both the buying and leasing cases, your insurance company will be the one to decide how much coverage you need.
Leasing a car requires a lot of additional coverage beyond the state's minimum requirements.
When leasing a car, the leasing company becomes the owner and holder of the vehicle's title. So, it is their right to protect their investment by asking for extra coverage. Some of these include:
GAP insurance:
It will help you pay off the lease if your car is totaled in an accident and the insurance settlement doesn't cover the entire amount that you owe on the lease. The potential loss you need to bear is the result of the difference between the car's actual cash value and less deductible. Gap insurance will help you pay that off. Even when your new vehicle depreciates quickly, this insurance will come in handy to bear the outstanding balance that exceeds the car's value.
Liability Insurance:
Under this type of coverage, firstly, you need to know your own state's minimum required liability insurance coverage. Each state has its set limit, which needs to be fulfilled. You may also require to carry other coverages in addition to this, which your leasing company will decide. For example, in some states, it is compulsory to have
- Uninsured/underinsured motorist,
- Bodily injury insurance.
- Physical Damage Coverage
This type of coverage is not mandated by the law but is required by most leading companies. In this, you will be protected against any damage caused to your car. The two types of coverages that come under physical damage are-
- Comprehensive Coverage: It will pay for non-collision-related damages such as theft, vandalism, fire, extreme weather conditions, hitting an animal, etc.
- Collision Coverage: As the name suggests, it will reimburse you for any damages caused to your car in an accident.
What are the Auto Insurance Requirements for a Financed Vehicle?
The insurance requirements on a leased, financed, or an owned vehicle is different. However, the amount of coverage may differ as per your lender's requirements. For example, if you have a loan on your car, you will be required to carry collision and comprehensive coverages and the state minimums. This is because your lender will want to protect their investment if your car is totaled or stolen. Other than this, all additional coverage is up to you whether you wish to add them or not.
Read this guide on certain things to consider before buying your first auto insurance policy.
The Final Word:
Auto insurance in Texas is advisable whether you buy or lease a car. It safeguards the owner's financial interest in case of any unforeseen events.
Buying a car is a one-time investment, and you are the vehicle's legal owner. On the other hand, leasing is more like a long-term rental agreement where you have to return the car to the dealership at the end of the lease term. In both cases, the best available auto insurance quotes in the market will protect you from any financial loss. Now that you are aware of it, what are you waiting for? Go ahead and make your decision! Call the insurance provider today only and sign the dotted line!