The loan company may also require “gap” insurance. This refers to the fact that if you have an accident and your leased car is damaged beyond repair or “totaled,” there’s likely to be a difference between the amount that you still owe the auto dealer and the check that you’ll get from your insurance company. That’s because the insurance company’s check is based on the car’s actual cash value, which takes into account depreciation. The difference between the two amounts is known as the “gap.”
The cost of gap insurance is generally rolled into the lease payments. You don’t actually buy a gap policy from an auto insurance carrier. Generally, the auto dealer buys a master policy from an insurance company to cover all of the cars it leases and charges you for a “gap waiver.” This means that if your leased car is totaled, you won’t have to pay the dealer the gap amount. Check with the auto dealer when leasing your car.
What is the difference between collision and comprehensive coverage?
- Collision covers the damage to the car from an accident with another automobile or object.
- Comprehensive covers a loss that is caused by something other than a collision with another car or abject, such as a fire or theft or collision with a deer.
What is the minimum car insurance coverage required in Florida?
The State of Florida requires all drivers to have at least $10,000 coverage in both Property Damage Liability and Personal Injury Protection. If you have previously been involved in a major crash or have been convicted of a certain offense, you may also be required to carry Bodily Injury coverage. Also, if you are financing a car, your lender may also have specific requirements on the types of auto insurance coverage you purchase (such as collision or comprehensive coverage).
What’s the difference between cancellation and non-renewal?
There is a big difference between when an insurance company cancels a policy and when it chooses not to renew it. Insurance companies cannot cancel a policy that has been in force for more than sixty days except:
- If you fail to pay the premium,
- You have committed fraud or made serious misrepresentations on your application, or
- Your driver’s license has been revoked or suspended.
Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state in which you live, your insurance company must give you a certain number of days’ notice and explain the reason for the non-renewal before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don’t get an explanation, call your state insurance department.