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Replacement Coverage for a Leased Vehicle

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 04/30/2017

Q: I have a leased vehicle. If it is a total loss the bank is paid off. Does any insurance company sell a rider to where they would pay me also so that I can get wheels to reduce my loss and down time and obtain another vehicle for my continued use. I can understand this would cost quite a lot because it would be like insuring two cars but I do stand to be disadvantaged if the leased vehicle sustains a total loss. If no normal company – would one like Lloyds of Lundon? And if so how do you find an agent?


A: The point of insurance is to indemnify, or put you right back to where you are when the accident happens. In this case, the lease is paid off and you go out and get another lease. That puts you back in the same position you were before the accident. Now, for the in between time when you are trying to get your new lease and find yourself without a vehicle, this is when carrying LOU coverage comes in handy. LOU is Loss Of Use coverage that will pay for you to be in a rental car while you are in between vehicles. There is a timeframe though, so don’t dilly-dally looking for that new vehicle.

The only coverage I can think of that would immediately put you right back into the same type vehicle is a new coverage that insurance companies are coming out with called “New Vehicle Replacement Coverage”. The name of this coverage will vary from insurance company to insurance company, as will if they offer it for leased vehicles. The good news though, you won’t have to go to Lloyds of London for that.


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Michele Wilmonen

Michele's first introduction to insurance was working for a major insurance company as a file clerk and a mailroom supervisor in a regional office. She learned insurance directly from underwriters and claims adjusters from questions and also watching them do their job. Since then, she's earned a number of insurance certifications from the Insurance Institute of America and also a Bachelor’s degree from the University of Idaho. She blogs at Car Insurance Guidebook.

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