Insurance does not come up when most individuals make the buying or leasing decisions. However, as can attest, it is vital to understand both ownership scenarios and their impact on the car insurance’s bottom-line.
Leasing and Financing
Ownership is the differentiator between these two vehicle financing plans. In leasing, one has two options.
- The first is leasing the vehicle for a specified period. In the end, the car is repossessed by the party leasing the car.
- A second alternative is a buying option. At the end of the lease, the vehicle’s title is transferred to the leasing party, in this case, the buyer.
Financing is taking up a loan to buy a car. The title of the vehicle transfers to the buyer upon completion of the payments due.
Insuring a Vehicle under Lease or Financing Agreement
Insurance in Lease Agreements
The vehicle’s ownership may be not be transferred to the current user of a , but there is an insurance burden they have to meet. The vehicle’s main insurance cover is the car owner’s responsibility. These are the insurance policies available in lease agreements.
Underinsured and Uninsured Motorist Coverage
This cover mitigates the loss incurred in the form of payments for medical bills. The cover helps victims of accidents caused by uninsured or underinsured drivers. This coverage is taken up by the leasing party.
Liability coverage policy meets the cost of damages to another’s car or property in the event of an accident. The leasing party buys this cover.
Collision Insurance Policy
This insurance policy is taken up by the owner of the vehicle. The cover meets the cost of repair of other cars involved in an accident.
The comprehensive cover caters for damages to the car as a result of anything other than an accident. The list includes vandalism, theft, and fire.
Gap Insurance Cover
Gap helps meet the lease balance if ever the buyer is incapable of making the required payments. Further, the insurance policy helps the owner recover the value of the vehicle if it is written-off after an accident.
Buying and Insurance
Cash purchases transfer ownership to the buyer instantaneously. Therefore, cash buyers have the option of taking up a third party, comprehensive or a liability cover. Their choices are unlimited and are based on the owner’s insurance needs.
For car buyers under loan agreements, the situation varies. Because the ownership title remains with the vehicle’s seller, the insurance options differ from those of a car owner. It is critical for there to be an understanding of the insurance requirements between the buyer and the vehicle’s owner. The seller may require you to take up an underinsured and uninsured motorist coverage or a personal injury insurance cover.
Buying or Leasing In Insurance Cost Terms
The insurance rates are lower for car owners when compared to those leasing or buying under financing agreements. However, the best assessment is done when all insurance considerations are factored in. Get car insurance quotes from money expert today.