Which coverage is typically required when financing or leasing a vehicle?

When financing or leasing a vehicle, collision and comprehensive coverage is typically required by the lender or leasing company. This is because these types of coverage protect their financial interest in the vehicle. If the car is damaged in an accident (collision coverage) or suffers non-collision-related damage (such as theft, vandalism, or natural disasters, covered by comprehensive coverage), these insurance types ensure that the vehicle can be repaired or replaced, safeguarding the value of the asset that the lender or leasing company holds.

Liability coverage, while mandatory in many states for driving a vehicle, does not protect the financial interests of the lender regarding the physical damage to the vehicle itself. Personal Injury Protection and Uninsured Motorist Coverage are also important parts of a personal auto insurance policy, but they focus on medical expenses and protection against uninsured drivers rather than the vehicle's physical damages. Therefore, collision and comprehensive coverage are crucial when it comes to financing or leasing a vehicle, as they fulfill the requirements set forth by financial institutions.