Deciding between leasing and buying a car in Colorado involves more than just the initial price tag. Understanding how car insurance will be affected by each option is crucial for making an informed financial decision. Cheap Insurance dives into the specifics and cost of auto insurance in Colorado for leased and owned, helping navigate this critical aspect of car ownership.
Key Takeaways:
- Colorado requires the same minimum liability car insurance coverage for leased and owned vehicles.
- Leases typically require full coverage car insurance insurance to protect the leasing company’s interest in the car.
- Gap insurance can be a valuable addition for leased vehicles to cover the difference between the car’s depreciated value and the remaining lease balance after a total loss.
- Both leased and owned vehicles experience insurance cost increases after at-fault accidents. Leased cars might have a slight cost advantage in some cases due to the lower replacement costs.
- Shop around for car insurance quotes, consider a higher deductible if comfortable, and maintain a clean driving record to keep your affordable auto insurance cost.
Are There Different Insurance Requirements for Leased vs. Owned Cars in Colorado?
In Colorado, the minimum car insurance requirements are the same for leased and owned vehicles. Both require drivers to carry:
Bodily Injury Liability. This covers injuries sustained by others in an accident the driver causes. The minimum coverage in Colorado is $25,000 per person and $50,000 per accident.
Property Damage Liability. This covers damage to the property of others caused by an accident the driver is at fault for. The minimum car insurance required is $15,000.
However, while the state mandates minimum insurance coverage, lease agreements often have additional auto insurance requirements imposed by the leasing company.
Comprehensive Insurance. This protects your leased car from theft, vandalism, fire, and other non-collision events.
Collision Insurance. This covers damage to the driver’s leased car resulting from a collision with another vehicle or object.
Is Gap Insurance Considered Inexpensive Car Insurance for Leased Cars in Colorado?
Gap insurance, also known as loan/lease gap coverage, can be a valuable addition to auto insurance in Colorado, especially for leased vehicles.
- Leased Cars Depreciate Quickly: The value of a car depreciates rapidly during the lease term. In the unfortunate event the leased car is totaled in an accident, standard comprehensive and collision car insurance will only pay out the car’s depreciated value.
- The Gap: The difference between the car’s depreciated value and the amount owed on the lease is known as the “gap.” If automobile insurance doesn’t cover the full value of the lease, be responsible for paying the gap out of pocket.
- Gap Insurance Fills the Gap: Gap insurance bridges the gap between the standard car insurance payout and the remaining balance owed on the lease. This can prevent you from having to pay a significant sum of money out of pocket if your car is totaled.
How Can Colorado’s Fault System Affects Car Insurance Costs When Leasing vs. Owning?
Colorado follows an fault-based car insurance system. This means that the driver who is found to be at fault for an accident is financially responsible for the damages caused. How this affects vehicle insurance costs for leased vs. owned vehicles depends on who is determined to be at fault in an accident.
- Leased Vehicle: If the driver is at fault for an accident while leasing a car, insurance covers repairs to the other driver’s vehicle and any injuries they sustain. Additionally, comprehensive and collision coverage will pay to repair or replace your leased car, minus the deductible.
- Owned Vehicle: If you are at fault for an accident with your owned car, the scenario unfolds similarly. Your insurance covers repairs to the other driver’s vehicle and injuries. However, since you own the car, there’s no leased car to be replaced by comprehensive and collision coverage. Depending on the extent of the damage and your coverage limits, your car might be declared totaled by the car insurance company. In this case, you would receive the car’s depreciated value from your auto insurance to use towards purchasing a replacement vehicle.
Here’s where the fault system comes into play.
- Cost Increase for At-Fault Drivers: If the driver is found to be at fault for an accident, regardless of whether the driver leases or owns the car, your cost for automobile insurance are likely to increase. This is because insurance carriers view at-fault drivers as higher risk and therefore more expensive to insure.
- Potential Cost Advantage for Leased Vehicles (Not Guaranteed): In some cases, leasing a car might offer a slight cost advantage when it comes to fault-related insurance. Since leased vehicles typically have lower depreciated values compared to owned vehicles of the same age, the cost to replace a leased car after a totaled accident might be lower. This could translate to a smaller increase in the cost of car insurance in Colorado compared to a similar situation with an owned car.
Leasing and buying a car in Colorado each have their own advantages and disadvantages when it comes to automobile insurance. Understanding these differences can empower the driver to make an informed decision that aligns with the financial goals and driving habits.
