All You Need to Know About Insurance for a Leased Vehicle

Leasing a car is the ideal option for individuals looking to enjoy the benefits of driving a new car without the long-term responsibility of owning a vehicle. However, just like vehicle owners, vehicle lessees too are mandated to obtain four-wheeler insurance under the Motor Vehicle Act.

A great benefit of having car insurance on leased car is that it protects both the lessee and the leasing company. With add-ons like bumper-to-bumper car insurance, one can even opt for more comprehensive coverage. Moreover, if one chooses to extend their renting period, car insurance renewal online is a readily available option for them. However, insurance with leased cars has even more intricacies that need attention.

What is a Leased Vehicle?

Car leasing is a contractual arrangement in which an individual gains access to a vehicle for a specified period. This involves making regular payments for the rental rights. After the lease term is concluded, the leased vehicle is returned to the lessor who owns the vehicle. Opting for a leased vehicle can be a cost-effective alternative to outright buying a vehicle, especially when considering the potential savings on maintenance costs and depreciation.

Insurance for a Leased Vehicle

Compared to privately owned cars, coverage of car insurance on leased cars has a distinct set of insurance considerations. While the lessor generally provides third-party insurance as a part of the leasing agreement, it only addresses the liabilities in the case of accidents involving other parties. This limitation could cause financial strain on the lessee in the event of damages caused by theft, natural disasters or other unforeseen incidents.

Hence, it is advisable to secure comprehensive car insurance from reliable insurance providers like Tata AIG. Coverage like this extends beyond primary third-party benefits and provides a more robust layer of protection for the leased vehicle. For this, understanding the basic lease car insurance coverage is of great importance. Here are the three primary covers offered for most leased vehicle insurance policies:

• 1. Third-Party

Mandated under the Motor Vehicle Act, a third-party bike insurance policy is a legal requirement for vehicle owners as well as lessees alike. Specifically designed to meet legal obligations, third-party plans offer financial protection limited to third-party vehicles and individuals. Although these plans cover injuries and fatalities along with property damage to the third-party vehicle, the coverage does not protect the vehicle owner or lessee.

• Stand-Alone

This policy entirely focuses on the policyholder’s financial security. It provides coverage against damages resulting from road accidents, natural disasters as well as fire incidents. Opting for a stand-alone pairing with a third-party plan provides more comprehensive coverage for the vehicle.

• Comprehensive

The best safety net in terms of leased vehicle insurance is a comprehensive plan. This not only includes third-party coverage but also protection for the policyholder’s vehicle. The comprehensive plan, however, does not cover damages incurred in the event of driving under the influence or accidents beyond the predetermined geographical area.

One should weigh all aspects of an insurance plan before going ahead with an insurance purchase.

How to Buy a Leased Vehicle Insurance in India?

To buy leased vehicle insurance in India, follow the steps below:

1. Select a reputable Insurance Provider.
2. Research on the requirements of suitable bike or car insurance.
3. Use tools to calculate your premiums and evaluate your additional needs.
4. Compare policies depending on your requirements.
5. Choose one that fits your needs.
6. Once decided, submit the proof of your insurance to your lessor.
7. Sign the lease agreement after reading the conditions.
8. Enjoy your vehicle!

Things to Remember When Buying an Insurance With Leased Cars

1. Most basic leased vehicle insurance policies cover third-party liabilities as well as loss or damage to the vehicle that is insured.
2. Add-ons like covers for depreciation reimbursement, EMI protectors and covers for the repair of glass, fibre, plastic, and rubber parts are important if the primary policy does not cover such aspects.
3. Claims that may arise due to contractual liabilities are not covered under most leased vehicle insurance.

Conclusion

To conclude, understanding the details of any leased vehicle insurance is essential before any decisions related to a purchase are made. A comprehensive approach gives the best benefits when insuring a leased vehicle. Naturally, one should also read all terms and conditions carefully before signing any lease-related contractual agreement.