Car lease protection insurance

When leasing a car, you're responsible for paying a minimum amount to the car dealership every month (or your agreed upon cadence). Car lease protection insurance is designed to help you should you find yourself in a situation where you're unable to make those repayments. It is a lot like specialised income protection insurance specifically for your car lease.

How does car lease insurance work?

Car lease protection insurance can pay out in circumstances such as involuntary employment, death or total loss of car in an accident. The exact benefits paid out depend on the terms of your policy, the terms of your lease and the situation at hand.

Lease protection for unemployment: For example, if you lose your job and can't make repayments you might have the choice of keeping the car, selling it or handing it back to the dealer.

• If you choose to keep the car, the insurance policy can help you keep up with payments until you find a job.
• If you choose to hand it back or sell it, your policy might pay the total amount left owing, minus the market price of the car.

If you opt to keep the car, the repayments required by your policy may vary. For example, one policy might make you pay one-thirtieth of the minimum monthly repayment for up to 120 days, while another policy might pay out a single lump sum.

Lease protection for death or vehicle loss: In the event of death, policies may pay out the remaining amount owed on the lease. In a total loss situation where the car is written off after an accident, your policy might pay benefits equal to the difference between your car insurance payout and the amount left owing on the lease.

Car lease policies can vary widely, and these are just some of the terms you may encounter. For example, involuntary employment is the focus of many policies, but not all options will include death cover. Reading your policy closely is key to understanding the type of cover it offers.

What are my car lease protection options?

Car lease insurance may be found with car finance plans, or through car dealers and auto specialists. As always, it's a good idea to compare available options and get multiple quotes rather than taking whichever policy your car dealer, or lender, offers.

Car lease insurance isn't the only way to get this type of cover; you may also want to consider gap insurance or income protection cover.

• Gap insurance: Gap insurance is much like car lease protection insurance that focuses on vehicle loss. It will typically pay the difference between your car insurance payout and any finance left owing on your vehicle at the time. You might think of it as a narrower and more specialised form of car lease protection.
• Income protection insurance: This functions much like a wider and more broadly usable form of protection insurance. It typically pays out in a wider variety of situations, including unemployment resulting from injury or disability, and will often give you more flexible options. Instead of paying specifically for the car loan, it pays out a proportion of your usual earnings while you're out of work and then lets you spend it on what is needed, including car loans or leases.

• Find car lease protection from brands like Aussie Car Loans or Stratton finance
• See how income protection works and get quotes

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Written by

Andrew Munro

Editor

Andrew Munro was the global cryptocurrency editor at Finder. During his time he covered all aspects of cryptocurrency and the blockchain. Before he became cryptocurrency editor, he was a content writer for Finder covering various topics over his nearly 5 years in the role. Prior to joining Finder he was a web copywriter. Andrew has a Bachelor of Arts from the University of New South Wales. See full bio

Co-written by

Peta Taylor

Associate publisher

Peta Taylor is an associate publisher at Finder, specialising in car insurance. She's been analysing product disclosure statements and publishing articles for car insurance for over a year. Peta has a Bachelor of Communications and Media Studies with a Major in Marketing from the University of Wollongong and a Cert IV in Media Journalism. Peta is part of Finder's car insurance awards team and works alongside editorial and insights experts to bring drivers the best in car insurance products every year. See full bio