Is the auto insurance different if I lease a car versus purchasing one?

This is a question we frequently receive from our Denver Metro and Arvada clients, so we thought we would share some insight into properly insuring a leased car.
For the most part, buying an auto policy on a leased vehicle is very similar to buying an auto policy on a purchased vehicle.  You will be mandated by the state to carry liability insurance and the bank will require that you carry comprehensive (covers against losses for something other than collision like theft or fire) and collision (covers the damage to the car from an accident with another vehicle or object) coverage to protect the vehicle itself.
However, the leasing company may require you to purchase “gap” insurance.  Gap insurance protects the bank (and you) in the event your vehicle is totaled in an accident and there is a difference in the amount you receive from the insurance company and what you owe to the bank.
Typically, the cost of gap insurance is actually rolled into your lease payments.  The auto dealer typically has a master policy that covers all of their leased cars and charges you for a “gap waiver.”
Gap insurance may be a good idea even if you are purchasing your vehicle.   You can protect yourself from having to come up with the difference on what you owe and the vehicle’s value. Gap insurance isn’t available everywhere, so please call our office if you are interested in receiving a quote.