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Leased Car Insurance

What insurance do you need for a leased vehicle?

Leased Car Insurance

Leasing, rather than purchasing an automobile has become an increasingly popular option. There are many situations that leasing is advantageous, and there are many benefits to leasing a car versus purchasing one.

Many Canadians lease cars because the monthly payment is lower on leased cars than for purchasing a car. Additionally, if the car is used for business, the payments are eligible to be deducted for tax purposes. A warranty on a leased car stays valid for the entire length of the lease, instead of just based upon the number of kilometers on a vehicle.

Leasing a car versus purchasing one is ideal if you need to have a new car every four years or less. The cost of maintaining a lease is much less than purchasing a new car in this timeframe. Many drivers in Canada have used this reasoning to lease the most popular selling vehicle in the country, the Ford F Series pickup truck. In fact, the F Series sold or leased twice the number of vehicles in 2013 than the top sold/leased car, the Hyundai Elantra.

Currently, the auto industry is booming in Canada with a 16% increase in new car sales in the past year. Additionally, 25% of vehicles in Canada are less than five years old, and if the owners of those vehicles continue the trend of replacing less than four years after purchase, the percentage of leases will continue to increase as well.

Insurance Required for Leased Cars

Many auto leasing companies require that you purchase GAP insurance. GAP stands for 'Guaranteed Auto Protection' and this insurance will cover you in the case of an accident. In the case of an accident, typical insurance coverage will ensure that the amount you get for the car is equal to current market value. In a lease situation, you are not the owner and could end up owing thousands of dollars to cover the cost of the actual value of replacing this car. GAP insurance is in place to protect you from this scenario.

Your leased vehicle insurance is very similar to the insurance you would have if you were to purchase a vehicle. The biggest difference is that your insurance card will have your name and the leasing agency's name on it.

When deciding which insurance company to use to cover your leased vehicle, it is important to do everything in your power to get an accurate quote. If you are considering two different car models to lease, call and ask for a written quote for each one to determine the cost difference. When comparison shopping it is easy to become confused by the details and having a written explanation in front of you will simplify the process.

Leasing a car can be a great investment, and with your comprehensive leased vehicle insurance, you should have greater peace of mind.

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