Under-insured Car Lease, any penalties?

Question

Hello, 4 yrs ago my father leased 3 new Toyotas, right now there is about 8 months to go. After finishing college I started to get into the family finances more (and got clinically depressed) and read over the lease contracts. It turns out we've been significantly underinsured almost for the entire span of the lease. The lease requires 100K/300K personal injury and 50K property damage, while our current insurance is 15K/30K and 15K property damage. I'd like some advice on what penalties if any I can expect in 8 months when the lease is up. Does the lease company check insurance coverage after the fact?? All 3 cars have had insurance claims already during the 4 yrs, one was almost totalled at $12K damage, but the insurance has always covered everything sufficiently. Should I even bother to get the lease-required insurance if I only have 1 6-months term left?? It would increase our payments astronomically and we're barelly surviving as it is.

Answer 1

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Answer 2

You are classically underinsured.  It sounds likt the statutory mandated amounts of coverage for the state you live in.  This has little to nothing to do with the amount of insurance you should have.  If you cause $100,000 damage or serious injury to another person, can you take care of it personally?  Probably not.  That's why you should carry 100/300/100 coverage at a minimm.  

Answer 3

There are really two different answers to your question.

1) No you won't be penalized at lease-end for not having contract-required level of coverage. Lease companies require a higher-than-minimum level to reduce the possibility that they will be named as co-defendent if you were to seriously hurt or kill people in an at-fault accident.

2) Your current coverage is too low in these days of expensive law suits. State minimum coverage levels were set years ago when the coverage would take care of most accidents in which you are liable. Today it is not nearly enough. What most people who have such coverage do not realize is that they are exposed to financially disasterous law suits when insurance coverage is insufficient.

The odds are in your favor, so if you will have problems paying for the higher coverage on the leased vehicles, you could avoid it without great risk.