Leasing a car for business purposes is a wise choice on many levels.
- The image the vehicle presents rubs off on the company leasing the model. A sleek-looking new car helps cast a nice light on the company and its employees.
- There may even be multifaceted tax breaks and deductions associated with leasing a car for business.
- The ability to replace a car with a new one quite easily is another attractive aspect of business car leasing.
Insurance policies, especially comprehensive ones, do come with costs. Frugal companies may be wary of costs, but insurance policies are probably not where cost should be cut.
Still, businesses do need to save money, which is why performing the most appropriate comparison shopping is critical when looking for a reliable and outstanding car insurance policy. Enter your zip code above to comparison shop for insurance today.
The Title of the Car
Confusion may exist about using a car for business versus a business owning a car.
Self-employed persons using their car for commercial purposes own a car in their name. Insurance policies are adjusted to cover the added risks associated with the partial commercial use of the vehicle.
Business leased car insurance, however, refers to insurance purchased for a vehicle that is titled (owned) by the business itself. This delineation is important to understand when seeking a policy.
The leased car is a liability (expense) that cannot be separated from the business. Again, the business owns the lease so the insurance policy must reflect this. Otherwise, the policy is not likely going to be a valid one.
Insurance on Leased Vehicles: Some Basics
Under state law, collision and personal liability insurance are going to be mandated. New Hampshire and Virginia do not require coverage by law, but this is moot when leasing a vehicle.
The lease dealership is absolutely going to require insurance. In the state of Florida, the minimum mandates on leased vehicles are very high. The Sunshine State requires a minimum of $100,000/$300,000 for bodily injury liability.
A person who buys a vehicle is going to have more flexibility with insurance options. Such is not the case when leasing a vehicle. The dealership owns the vehicle and is, in essence, renting it out for an established fee.
The dealership can mandate certain insurance requirements to protect its assets.
Collision and comprehensive insurance are going to be unavoidable when leasing a vehicle. Those who personally insure their own car might not be worried about damages outside of collision and liability so they drop or drastically reduce comprehensive coverage.
Again, the actual owner of the vehicle is the leasing agency and it would make sense to mandate comprehensive coverage as part of the policy.
After all, someone has to pay for the vehicle is, say, the car is stolen. The insurance company would be the easiest source to recover funds since a legitimate policy is promising to do so.
Discuss the Lease Gap
The “lease gap” refers to the amount of money owed on the term of the lease and how much money the insurance company pays out if the car is totaled.
If the vehicle is totaled and the insurance company pays $20,000, but the amount owed to the leasing company is $28,000, the leaseholder ends up being responsible for the difference.
The only way he/she gets out of paying for the difference is if lease gap (the gap between the lease and the final amount owed) insurance is taken out.
Often, the leasing dealership pays for lease gap insurance and charges the fee to the person leasing the vehicle. Do not automatically assume this is the case when leasing a car! Ask about the particulars of lease gap insurance.
If the amount is missing or inadequate, then it would not hurt to inquire with an insurance company to see if this coverage can be purchased. Perhaps a rider could be added onto an existing policy.
Through taking part in effective comparison shopping, finding a decent deal on lease gap insurance may be procured.
Uninsured Motorist Coverage
Uninsured motorist coverage is not mandatory, but the coverage is helpful. Any vehicle hit by an uninsured motorist could end up being stuck with the costs of the repairs. After all, there is no “opposing” insurance company to make a payment to reimburse the costs of damage.
Once again, the person or entity that leases the vehicle is responsible for it. The remaining balance on the lease has to be covered along with the value of the car.
Someone who does not take out an uninsured motorist policy on a leased vehicle is taking a major risk, a risk that would be a completely unnecessary one as well.
Why is it so important to have so much insurance in place?
Protecting the Assets of the Business
Car insurance covers more than just the damage to the vehicle. The personal liability insurance associated with the car could protect the assets of a business, assets an injured party may be very interested in appropriating.
This is not said to trivialize accidents or any resulting injuries. However, a high-profile business with considerable assets may find a person injured in an at-fault accident might be less willing to accept a quick settlement.
Procuring the maximum amount of liability coverage could greatly assist with protecting company assets in such a scenario.
Leasing a car makes things very easy for a business in a lot of ways. In truth, even seeking out a solid insurance policy is fairly easy. Online insurance comparison sites allow for reviewing policies with little trouble.
Through selecting the right policy, a business ends up protecting itself greatly.
A Simple Cost-Saving Strategy
One of the best ways for a company to save money on leased vehicles is through purchasing a bundled deal of insurance. In other words, one policy is purchased to cover several leased vehicles.
The insurance company ends up giving a discount since the company is taking all its business to the one insurer. Saving money this way is definitely going to be preferable to saving money by cutting down on helpful insurance coverage options.
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