While many people desire to purchase a new car, not many can afford paying the huge price. Apart from paying for the vehicle itself, there are other costs that you may have to bear, including car maintenance and service costs. All of these charges significantly increase the overall budget.
So, if you have been wanting a car, but do not have the necessary financial resources, a feasible option is to rent or lease a car. Car leasing concept is slowly gaining popularity in India. Here you use a car for a specific period (the lease period) in exchange of a subscription charge. This charge can be a one-time payment or a monthly fee.
After the lease ends, you must return the vehicle. While you are using the car, you need not worry about paying for the maintenance and service costs; the car owner or the lessor will take care of it. But do you know what happens if you get involved in an accident while driving a leased car? Read on to know how car insurance for leased cars work.
Car insurance for leased carx
Car insurance for leased cars is significantly different from the cars you own. In most cases, you get only the third-party car insurance coverage. This means if your leased car gets stolen or damaged due to riots, strikes, or natural disasters like earthquakes, landslides, cyclones, hurricane, etc., the owner will not get compensation from their insurer, and they may ask you to compensate for their loss.
Get a comprehensive car insurance coverage for your car
As mentioned above, most car lessors offer only a third-party insurance. It offers coverage only to the damages you may cause to third-party’s car or other assets. It does not offer financial protection to the damages to your car. So, to get an extensive coverage, it is better to purchase a comprehensive car insurance policy. It covers both third-party liabilities and own damages.
In addition, a comprehensive car insurance policy allows you to get protect against natural calamities like earthquakes, cyclones, landslides, and theft. Also, when you buy a comprehensive car insurance policy, you can purchase add-ons of your choice to get additional coverage against specific risks that are not covered in your standard policy.
Here are some of the coverages you get in car policy.
Collision damage waiver – It can come to your aid in case of minor damages to the car body. It covers small dents, scrapes, etc.
The theft protection – as the name suggests, it offers financial protection if your leased car gets stolen.
Third-party liability – it usually comes as a default with your leased vehicle and protects from financial liabilities that may arise if you cause damage to a third-party’s vehicle or other assets.
Important things to know while buying leased car insurance
Buying a car insurance policy for a leased vehicle is much cheaper for vehicles that are less than two years old than other cars.
Although the premiums for leased cars are quite affordable for all, if you purchase a comprehensive policy that includes collision damage waiver cover, the premiums are generally high.
Unlike the cashless claim facility that you get for private vehicles, with leased cars, you must pay for the damages upfront and then file a claim to get reimbursement from the insurance company.
If you don’t get collision damage waiver coverage, the car leasing company may charge you additional rent. If something happens to the car, you are charged for fixing the damages and also for towing the vehicle to the garage. In the event of a major accident, some leasing companies may also charge you for the loss of business they may suffer while the vehicle is under repairs.
Final Word
As per the Indian Motor Vehicles Act, car insurance is mandatory for all, whether you own, rent or lease a car. The insurance coverage for leased cars is generally less comprehensive than standard car policy. It is advisable to do your research and get the right coverage to protect yourself from financial liabilities in the future.
