Auto leasing, temporarily crippled by last year's credit and financial crisis, is making a comeback this fall. And when leasing vehicles, there are certain regulations that apply specifically to automobile insurance. In general, you can count on paying more for your automobile insurance when you lease. The majority of leasing companies require that you maintain a policy with minimum liability limits set at $100,000 and $300,000 for bodily injury – per accident individual and group based respective.
Additionally, when you lease a vehicle instead of buy it, you will no longer have the option to reduce your automobile insurance rates as the vehicle ages. Major automotive manufacturers are introducing creative new leasing programs to make up for losses experienced during last year's credit lock up. Of course, these manufacturers stand to gain more from leasing and selling outright. Before the credit crunch, nearly 20% of all vehicle transactions were leases. This number dropped to 7.2% back in August and shot back up to 12.8% during October. All signs definitely demonstrate rebounding conditions.
Tips for saving money on auto insurance rates when leasing a new vehicle:
- Make sure that you understand whether or not the lease contract that you are engaging in includes a gap insurance policy. Simply put, gap insurance covers the difference between the amount that your insurance company will pay if your car is totaled and the balance due that you owe the finance company. Industry experts agree that gap insurance is a solid value.
- Recognize that the Big 3 auto manufacturers have all initiated leasing programs for both small and mid-sized vehicles as well as the large SUVs. This is an attempt to encourage consumers back into these type of vehicles. Explore your options for leasing vehicles that are more affordable to insure.
- Realize that attractive leasing deals are more difficult to find now than they were before last year's credit crunch. You're going to have a harder time finding incentives and discounts to make leasing attractive.
- While insurance may cost more for a leased vehicle, your monthly lease payment will likely be less than the payment that you would make to own the vehicle.
- Leasing a vehicle is especially suitable for those who enjoy changing cars regularly and/or receive tax breaks for business driving purposes.
- Limit the lease term to no more than 3 years. This way, as long as you are leasing the vehicle, it will be covered by the manufacturers new car warranty.
Finding affordable auto insurance rates for your leased vehicles is a definite possibility. Remember that lower-horsepower, more economical vehicles are always cheaper to insure.
