Leasing a Mazda 101
Leasing a Mazda vehicle entails signing a lease agreement for a term that is two or three years in duration. The monthly payments you will be required to make will be lower than they would when buying or financing a car. These payments are set based on a predicted depreciation value, and at the end of your lease agreement, you will turn the vehicle back in for its trade-in value and then either buy or lease another vehicle at that time.
Since you do not pay for the full value of the vehicle, it can be more affordable to live in a nice Mazda vehicle . One thing to keep in mind is that you will have to abide by a mileage limit set by the manufacturer. In some cases, it may be between 15k and 18k miles per year, but this will depend on the requirements of your precise vehicle. Exceeding these mileage amount could result in steep penalties for you.
Additionally, there are certain restrictions with leasing in terms of the customization of your vehicle. Since you do not own the car, you may not be able to significantly alter its style without the permission and agreement of the dealership and the manufacturer.
Importance of Insurance for Leased Mazdas
Understanding Mazda Lease Insurance Requirements
Insurance is a useful tool that can save you from unexpected costs further down the line should an accident, theft, fire or even a natural disaster happen. Having the right coverage can mean the difference between gaining peace of mind and paying unnecessary out-of-pocket expenses for repair, accident coverage or even full coverage in the event of total loss.
In the case of leasing, insurance is especially important and obligatory. After all, you aren’t legally responsible just for covering the costs associated with damage to the vehicle — you’re responsible to the leasing company as well. You are essentially driving a borrowed car. Which is also a depreciating asset.
If you haven’t leased a car before, you’ll be surprised to find out just how much insurance coverage you will need to carry. While many people are used to carrying liability insurance on their personal, you’ll need something different when leasing a Mazda. You’ll need to have gap insurance, sometimes called "total car replacement," as well as being in compliance with all of the State of Michigan’s insurance requirements.
Common Insurance Requirements for Leasing a Mazda
Like many other automakers, Mazda requires leaseholders to maintain insurance coverage on their leased vehicle. Standard insurance requirements are usually reflected in any type of policy for a leased car. Some insurers may recommend higher limits, but the leasing company generally dictates a minimum level of coverage required.
Depending on the state laws of the customer’s home state, the insurance policy must not only provide the minimal amount of coverage, but also have coverage for physical damage that exceeds those minimal limits. The typical lease agreement will require coverage in the following amounts:
Collision coverage
The collision coverage requirements of a leased Mazda will typically be at least equal to the actual cost of repair for any damaged caused to the vehicle after applying the deductible. For example, if your annual deductible is $1,500 and the cost to repair a damaged Mazda vehicle is $3,500, your insurance would cover the remaining balance of $2,000. Otherwise, they would require you to purchase a $2,500 deductible, which will allow for more flexibility in determining the repair costs.
Liability coverage
Most liability provisions under standard auto insurance policies on leased Mazdas range from $100,000 to $300,000 and $50,000 to $100,000 for personal injury protection. Although financial responsibility is limited to state-mandated minimums, alternative insurance options not found in the auto policies are available for leasing companies such as "liability plus."
Collision/theft loss
Although similar to collision insurance, theft loss coverage provides additional benefits that protect consumers and leasing companies from losses caused by theft or an uninsured third party. For example, if an accident resulted in a total wreck of the leased car, the leasing company may require the lessee to purchase collision coverage to replace the car. Therefore, if the totaled car was worth $25,000, the lessee would be required to purchase only $25,000 worth of insurance. However, if the leasing company required the lessee to purchase inclusive coverage, the leasing company would cover the loss up to $50,000 of the used replacement cost value when the car was new.
Comprehensive coverage
In the event of theft, leasing companies actively look for theft insurance policies that cover the entire value of the loss (less any deductibles). Certain limitations or exclusions tend not to apply to leased cars.
Getting a Grip on Coverage Limits and Deductibles
As with all vehicles, Mazda lease insurance policies come with coverage limits and deductibles that determine the extent of financial coverage in the event of an accident. Understanding these numbers is essential to budgeting for monthly payments and emergency funds, as well as for determining the overall cost of your policy.
The first number to remember is $25,000. This is the minimum amount that Mazda will agree to waive against a lease payment in the event of an accident. If you total your leased vehicle, they’re only going to let you off the hook for $25,000 on your outstanding balance – the remainder will be all yours. This can be a huge hit on your wallet, but it’s easily avoided simply by purchasing gap insurance through your Mazda dealership before you drive off the lot.
The second number you’ll need to pay attention to is your deductible. This is the amount you’d be responsible for, out-of-pocket, in the event of a claim not covered by gap insurance. On its own, Mazda charges a relatively small deductible for leased vehicles – just $50. However, you’ll want to avoid incurring a deductible wherever possible, as any money you owe is immediately added to your lease account. So if you let a donut-loving house guest eat some donuts in your car and he spills crumbs all over your pristine cloth upholstery, it’s going to cost you a deductible and the cost of shampooing the upholstery – as well as the inflated rate on your new lease policy.
It’s obviously in the best interest of any Mazda owner to keep his or her vehicle damage-free and well maintained. For lease holders, this is especially true. If that new Mazda CX-9 can make it two years without being scratched or dented, you’ll avoid paying a sizable deductible and you can even get bonus miles or dollars off your monthly payment just for getting truly involved in the upkeep.
Exploring Extra Coverage Options
Additional coverage options for Lessees
The case scenarios we have discussed above represent the core insurance requirements for leasing a Mazda vehicle. However, there are other types of coverage that may be offered in conjunction with the above requirements, or at times may be required by a dealership depending on the situation.
Some dealerships offer GAP insurance policies for leasing a Mazda vehicle. GAP insurance covers the gap between the amount still owed on the vehicle and its actual cash value at the time of loss. Similarly to the above situations, GAP insurance will cover the difference between the amount of a total loss and the amount paid by the lessee’s insurance policy; however , GAP insurance usually comes at an additional cost. This extra protection can come in handy when leasing a more expensive vehicle or a vehicle being driven for higher annual mileage. Moreover, some dealerships offer GAP specifications that pay a vehicle’s actual cash value plus an added benefit amount toward the remaining vehicle balance. Some GAP specifications may also cover negative equity rolled over from a trade-in vehicle into a new lease. It is important to review the amount of coverage and the premium charged for GAP insurance when deciding whether to purchase a GAP policy.
Finding Affordable Insurance for Your Leased Mazda
While you want to fulfill your lease obligations, this doesn’t mean you have to pay a premium when it comes to insuring your Mazda. You can be smart about how you approach finding the right match for your needs to save yourself some extra money.
Look into Bundling
A great way to lower your overall insurance costs is to bundle home and auto policies under the same insurance company. They generally provide discounts for bundling coverage. When you go to get insurance on your Mazda lease, do so under this condition. Make sure you’ll be able to bundle for savings.
Give the Agent More Than A Small Piece of the Picture
It’s easy to get wrapped up in the sale of the vehicle itself without considering the finances. However, you can save more by giving your insurance broker as much information as possible about both your personal and insurance-related finances. Sharing everything from your employment status to your income info to your assets will help your broker find you a deal that will work for you. Keep in mind that the terms can change if certain life circumstances change, so be sure to keep the agent up-to-date if there are changes.
Prioritize Customer Loyalty
Don’t jump from one insurance company to another after getting the car. Call your agent to see whether the company offers loyalty discounts for commitment to the company. If these are not available, talk to your current insurance company about other discounts.
What to Do to Comply with Your Lease’s Insurance Requirements
To ensure compliance with Mazda lease insurance requirements, lessees should perform regular policy reviews. Over the life of a lease, coverage can change based on how the vehicle is driven. If a lessee realizes their driver profile has changed from how they initially reported, they need to contact their insurance agent and request changes. These changes could involve raising the liability limits or adding coverage if the vehicle is used more than anticipated , for example. It is therefore a good idea for lessees to periodically review their policy and compare to the minimums in the lease agreement to avoid unnecessary gaps in coverage.
Lessees also need to stay in regular contact with both their insurance company and Mazda to ensure all requirements are met. Coverage may unwittingly be lost if the lessee forgets to inform the insurance company about a change in driver or location if the car is involved in an accident. Or, the lessee could receive a penalty if Mazda is not made aware of the change. Communication is key, and it’s helpful for a lessee to be proactive in maintaining lines of communication with both sides.