Like every car on the road, the state will require you to have liability insurance and your lessor, like any lender, will require comprehensive and collision coverage to ensure that their vehicle is protected.  If you already have a great insurance company and/or a great agent, you may be all set.  But if this is your first time leasing, it may also be a great time to shop around and make sure you get insurance that fits your needs, and your budget.

Make sure the deductible is something that can fit your budget, but also know how much of the deductible will be covered by GAP coverage, if that’s included in your lease.  If you’re leasing a new car and your insurance company offers an add-on product for mechanical breakdown insurance (MBI) it’s important to understand if that’s included only if you opt-in, or if it’s automatically added unless you opt-out of it.

MBI is similar to a vehicle service contract (VSC), which also is sometimes known colloquially as an “extended warranty” – meaning it covers the things that aren’t covered by the manufacturer’s warranty.  In certain states dealers offer Mechanical Breakdown Insurance instead of a Vehicle Service Contract because of legal and regulatory reasons.

In any event,  two things to keep in mind about this coverage and getting proper auto liability insurance on your car:

  1. If you’re leasing, you likely won’t have possession of the vehicle when the manufacturer’s warranty expires, so generally it won’t make financial sense to get Mechanical Breakdown Insurance (whether through your insurance company or the dealer) or a Vehicle Service Contract from the dealership.
  2. If it does make sense to get this coverage, be sure you only get it once – either through your insurance carrier or the dealership, but don’t end up paying for it twice.  And obviously feel free to do price comparisons between your insurer and the dealership to determine what makes more sense before signing any papers.