Do you have the best insurance for your leased vehicle?
There are plenty of reasons Canadians choose to lease rather than purchase their vehicles. Generally speaking, the monthly payments are lower, and the vehicle is almost always under warranty during the life of the lease are two of the big ones. On the other hand, you won’t own the vehicle at the end of the lease term and might have to pay extra fees for any out of the ordinary wear-and-tear or if you go over the km limit specified in your lease agreement.
Many Canadians already know about the pros and cons of leasing.
It’s estimated that about one-third of drivers in the country lease their vehicles. With so many people choosing to go this route, it’s important to know if you have the right auto insurance coverage.
Auto insurance for your leased vehicle
Regardless of whether you purchase or lease your vehicle, you’re required to have insurance for it. But there are some things you need to know when it comes to your auto insurance when leasing:
1. The leasing company will be listed on your policy.
The leasing company will be listed on your auto insurance policy. That means if you change your coverage options, limits, or deductibles, your insurer will inform your leasing company directly. Likewise, if your policy is cancelled, your insurer will inform the leasing company of that too.
2. Your leasing company will need a copy of your insurance policy.
Each year, your leasing company will probably need to see a copy of your insurance policy. If you switch insurers because your broker found you a better rate, or when you renew an existing policy, you’re expected to provide them with proof that you’re still insured for the coverages required.
3. Your leasing company will likely require specific coverages.
Ontario requires all drivers to have a minimum set of mandatory auto insurance coverages. However, your leasing company may insist on having higher limits than the minimum of what’s needed. The leasing company will also likely require that your policy includes collision and comprehensive coverage. Normally, these coverages would be optional, but they are not if you lease or finance a vehicle.
Collision coverage offers protection if your car is damaged in an auto accident, while comprehensive offers protection for non-collision related claims (like theft or vandalism). Both coverages – collision and comprehensive – have a deductible. A leasing company may cap the maximum deductible you can set to $1,000.
4. Limited Waiver of Depreciation.
One of the benefits of leasing is that you’re driving a new car. But what happens if that car is written-off after you take possession of it. Perhaps it’s stolen, or you’re in an auto accident.
Without the optional Limited Waiver of Depreciation endorsement, your insurance company will pay out what they assess to be the vehicle’s value at the time it is written-off, not what it was worth new. Depreciation will factor into this assessment.
However, the insurer’s assessed value may be less than the payments you still owe on the lease. With this waiver, which is typically available for the first 24 or 36 months of your lease, your claim payout (minus your deductible) would be for the vehicle’s replacement cost without factoring in depreciation.
Let DPM Insurance Group do the legwork
At DPM Insurance Group, finding you the best rates for our clients is what we do every day. We work for our clients, not the insurance companies and can compare rates from our network of providers. Click here to find the office closest to you: https://dpmins.com/locations/