Insuring Leased vs. Owned Commercial Vehicles 

When it comes to commercial vehicle insurance, businesses must understand that leasing and owning vehicles come with distinct insurance considerations. While both require coverage to financially protect against liability, damage and loss, the structure and requirements of that coverage can vary significantly.

Key Distinctions When Insuring Commercial Vehicles

Although your exact coverage needs may vary, optimally insuring leased and owned commercial vehicles may depend on various factors. Consider the following:

• Ownership and insurable interest—For owned vehicles, the business holds the title and has full insurable interest. This can allow for more flexibility in choosing coverage limits, deductibles and insurers. In contrast, leased vehicles are technically owned by the leasing company, which means the lease agreement often dictates specific insurance requirements, including minimum liability limits and types of coverage.

• Coverage requirements—Leasing companies typically require lessees to carry comprehensive and collision coverage, often with low deductibles, to financially protect their assets. They may also mandate higher liability limits than a business might choose for an owned vehicle. Additionally, leased vehicles often require gap insurance to cover the difference between the vehicle’s value and the remaining lease balance in case of a total loss.

• Policy naming and additional insureds—For leased vehicles, the leasing company usually must be listed as an additional insured and loss payee on the policy. This can help them receive compensation in the event of a claim. Owned vehicles do not require this, thus potentially simplifying the policy structure.

• Cost implications—Insurance for leased vehicles can be more expensive due to stricter coverage requirements and lower deductibles. However, businesses may benefit from newer leased vehicles with advanced safety features, potentially lowering premiums.

We’re Here to Help

Understanding these differences helps businesses make informed decisions and remain compliant with lease agreements while ensuring adequate protection. It’s always wise to consult with an insurance advisor familiar with commercial policies.

Contact Delia Izquierdo Insurance Agency in Miami, Florida, today to learn more about your options and secure ideal coverage.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.