Overview of the role of insurance in leasing arrangements: protection and assurance

Overview of the role of insurance in leasing arrangements: protection and assurance

Long-term vehicle leasing involves insurance of the risks associated with leasing a car. This part of the agreement guarantees the lessor that the money for the car will be reimbursed, even in the event of an extraordinary event that has the characteristics of an insured event provided for by the operational leasing agreement. Insurance also protects the lessee from significant material costs.

Leasing insurance: guaranteed protection and financial stability

Operational leasing on a car for any company is associated with certain risks. During operation, the car may be damaged, get into an accident, etc. Risk insurance under an operational leasing agreement is beneficial for both participants in the transaction, because it provides a solution to financial issues by a third party - an insurance company.

Ukrainian legislation provides for compulsory insurance of civil liability of the owners of the leasing object, since such a format guarantees the transparency of the transaction. All financial issues of the insurance document must be resolved in advance and suit both parties. The insurance company assumes responsibility for providing compensation for harm caused to life, health and / or property of victims of a road traffic accident and protecting the property interests of policyholders.

Risk insurance when leasing cars provides the following benefits:

Leasing insurance is more important for a lessor who owns a car and wants to protect himself from the additional costs associated with the loss of property and its restoration. The lessee chooses the amount of insurance risks that the transaction will cover. The more of them, the more expensive the cost of insurance will be, but the better the guarantee of securing property expenses. Therefore, you need to select actual cases that can happen with a high probability.

insurance  leasing

Car leasing: how to effectively use insurance to protect your car

Leasing car insurance is a prerequisite for a long-term lease agreement, without which it cannot be transparent and legal. When delivering vehicles to customers, Avis undertakes the obligation to insure vehicles and includes this clause in the contract.

Is insurance required for leasing?

As noted earlier, long-term car rental from Avis provides for mandatory insurance for each vehicle. Transparency of transactions is a top priority for a company that wants to provide guarantees to both the lessor and the lessee, the two interested parties in the contract.

When considering whether insurance is mandatory when leasing a car, there can be no question of avoiding such a procedure, because this will indicate an attempt to avoid liability. Leasing insurance is a common practice for European countries. Given Ukraine's desire to join the European Union and become a member of a developed society, it must modify legislation in accordance with international norms, and effective steps in this direction are already being taken.

Insurance and financial leasing contracts are concluded simultaneously. It is important to involve a qualified insurance company in the procedure, which will be able to clearly determine the insured risks and the amount of compensation in the event of an event that is an insured event. Avis cooperates with just such experienced and solvent insurers, so the financial side of the transaction will be provided at the highest level. You should also take into account the specific risks associated with the field of activity of an enterprise that takes a car for a long-term lease.