For many Canadians, having a vehicle in the household is a priority. The freedom of getting around a city or taking a road trip vacation is desirable and depending on your budget or needs, you can either lease or purchase outright. Leasing gives you the option to replace your vehicle every few years, lower monthly payments and you don’t need to worry about selling it in the future. Purchasing a new or used vehicle means you own it. If you commit to taking care of the vehicle, selling it in the future could result in getting some of the value back in your pocket.
Regardless of how you buy a vehicle, you are required to have car insurance. We recommend having comprehensive and collision coverage on all vehicles, whether you own or lease. If you own the vehicle, you are not legally required to have comprehensive and collision coverage; however, on a leased or financed vehicle it’s mandatory since the leasing company or lienholder owns the vehicle and needs to fully protect it. There is no difference in premiums and deductibles if you lease or buy. The financing company will be listed as a lienholder on your insurance policy documents.
If there is a claim and the leased vehicle is written off, the insurance claim will be paid out to the financing company. Depending on the provider and the value of the vehicle, you can purchase additional insurance coverage in the event a loss paid out on a claim is below the financed amount, as you would be responsible to cover this portion. For example, if the leased vehicle is worth $12,000 and due to an accident the vehicle is written off, and the lienholder receives $10,000 from the claim, you would be responsible for the $2,000 difference without supplemental coverage. Not all insurance companies offer this coverage and best to speak with a BrokerLink broker on the options available.
Leasing or buying a vehicle does not change how much you pay for insurance. For leased vehicles, full comprehensive and collision coverage is required and we recommend it even if you own a vehicle too. Be sure to speak with a BrokerLink broker to find insurance coverage to meet your needs. As we work with many different insurance companies, we shop the market to provide competitive car insurance quotes at the best rate possible.