Whether you finance, lease or pay cash, you always need adequate vehicle insurance. Most states require you to purchase a minimum amount of certain kinds of coverage, and creditors and lessors have minimum requirements that are spelled out in the installment contract or lease agreement.

The most common types of coverage are:

• Liability, including medical payments, no fault, and uninsured/underinsured motorists
• The state in which the vehicle is registered may impose minimum requirements for liability insurance. These requirements vary from state to state
• Lease agreements require liability insurance with a typically higher limit than that set by the state
• Physical damage, including collision, comprehensive, rental reimbursement, towing and labor, and vehicle replacement
• A deductible is usually applied to collision and comprehensive coverage. This is the amount you must pay for repairs before the insurance company pays the rest
• Physical damage coverage is required on all financed or leased vehicles. This coverage must be kept in force for the term of the contract or lease agreement