Some leasing companies may require you to carry certain amounts of car insurance as a part of your leasing agreement. While leasing a car, there’s a good chance you’ll have to get comprehensive and collision coverage, plus extra liability insurance.
You’ll also need to make sure that you have gap insurance on a leased car. This is a type of car insurance that pays out the difference between the value of your car and your lease after your vehicle is totaled.
What insurance do you need for a leased car?
Nearly every driver needs to purchase auto insurance, but with a leased car your insurance needs could be different — and more expensive — from someone who owns their own car.
If you drive a leased car, your insurance requirements will be determined not only by your state’s laws, but also by your leasing company. You won’t be able to carry a policy with only the state’s minimum required amount of car insurance if you lease.
Insurance for leased cars your state requires
Drivers in every state except for New Hampshire and Virginia have to carry auto insurance before they can drive legally. If you drive a leased car, you still have to make sure to get enough insurance to satisfy your state’s requirements.
Usually, states have rules about how much of the following types of coverage drivers need to get:
Bodily injury liability: Pays for injuries you cause to other people in an at-fault accident.
Property damage liability: The other part of your policy’s liability protection, which covers property damage you’re responsible for causing.
Uninsured motorist: Covers your medical expenses if you’re hit by a driver who doesn’t have insurance or who doesn’t have enough insurance to cover your medical bills.
Personal injury protection: Also called PIP, this pays for your medical bills and other expenses when you are in an accident, no matter who is at fault.
Insurance your leasing company requires
If you drive a leased car, your leasing agreement will tell you how much insurance you need to get on top of your state’s minimum required amounts. Usually, you have to get full-coverage car insurance when leasing, which includes:
Collision coverage: Protects your leased car from crashes you’re responsible for, including with other cars or objects.
Comprehensive coverage: Covers damage that’s not caused by collisions, like damage from animals, weather, car thefts, and more.
You may also have to get more liability insurance when leasing a car. Some — but not every company — requires drivers to get at least $100,000 of bodily liability coverage per person and $300,000 per accident, plus $50,000 of property damage liability insurance.
Below are guidelines for insurance on a leased car from some popular lessors.
Leasing company | Insurance requirements |
|---|---|
Chrysler | Comprehensive and collision coverages |
GM | Bodily injury liability: $100,000 per person/$300,000 per accident; Comprehensive and collision with a maximum deductible of $1,000 |
Honda | Comprehensive and collision coverages |
Hyundai | Comprehensive and collision with a maximum deductible of $1,000 |
Mercedes-Benz | Bodily injury liability: $100,000 per person/ $300,000 per accident; Property damage liability: $50,000; Comprehensive and collision coverage with maximum deductible of $2,500 |
Tesla | Bodily injury liability: $100,000 per person/$300,000 per accident; Property damage liability: $50,000 for property damage; Comprehensive and collision coverage with maximum deductible of $2,500 |
Toyota | Comprehensive and collision with a maximum deductible of $1,000 |
Do you need gap insurance for a leased car?
Besides comprehensive and collision coverage, you might be required to carry gap insurance for a leased car. Gap insurance protects you from paying for the value of your lease by yourself after your vehicle is totaled.
If you totaled your car, your insurance would pay for the actual cash value of your vehicle, or its value after depreciation. But since the value of your leased car goes down as you drive, your car can be worth less over time than your lease.
Without gap insurance coverage, you’d have to pay the difference between your car’s actual cash value and your lease, which could be hundreds of dollars. Gap insurance makes up for your car’s loss in value by paying the difference for you.
Is insurance more expensive for leased cars?
It’s typically more expensive to get car insurance with a leased vehicle than for one you own. This is because you have to get more car insurance for a lease than what’s required by any state.
We found that car insurance for a leased vehicle — which includes more liability protection, along with comprehensive and collision coverage — can cost $1,207 more each year than a minimum-coverage policy depending on the amount of liability insurance you need.
Coverage | Amount of coverage | Annual average cost |
|---|---|---|
Minimum coverage | Enough liability coverage to meet your state's minimum required limits | $620 |
Full coverage | Bodily injury liability: $50,000 per person/ $100,000 per accident Property damage liability: $50,000 Comprehensive and collision coverage | $1,638 |
Complete coverage | Bodily injury liability: $100,000 per person/ $300,000 per accident Property damage liability: $100,000 Comprehensive and collision coverage | $1,827 |
If your car insurance costs for a leased vehicle are too high, the best way to lower your rates is by getting multiple quotes from different insurance providers in your area. This way, you can avoid paying more than you have to for coverage.
How to get car insurance for a leased car
Getting car insurance for a lease is similar to getting insurance for a car that you own, but there are a couple of key differences. When shopping for insurance for a leased car, you’ll have to:
Figure out how much insurance your leasing agreement requires you get.
Find companies that offer gap coverage, and fill out an application for a quote
Compare quotes from different insurers and decide on the best rate
Include your lessor as a loss payee if your vehicle were damaged
Since your leasing company is technically the owner of your leased vehicle, the company has an insurable interest in your vehicle (meaning something to lose if your car were damaged). Once your lease ends, or if you default or end your lease early, the car returns to the leasing company.
Listing your leasing company as a loss payee on the policy means that if you make a claim for damages, your leasing company gets to collect the payout.
Is car insurance included when leasing a vehicle?
Insurance isn’t included when you lease a car, so you’ll have to get covered yourself before you can drive legally.
You can either get a new policy before you leave the leasing dealership, plan to activate coverage for the lease on the day you go to pick it up, or add a leased vehicle to an existing policy later on.
Frequently asked questions
What are common lease insurance requirements?
If you lease a car, you’ll have to carry comprehensive and collision coverage in addition to the amount of liability insurance that your state requires. It’s common for leasing companies to require a set amount of liability coverage, too. At least $100,000 of bodily injury liability protection per person, $300,000 per accident, and $50,000 of property damage coverage are all typical requirements.
Is a lease more expensive to insure than a car you own?
It can be more expensive to get insurance for a leased car than one you own. Leasing companies often require that you carry comprehensive and collision coverages, plus higher limits of liability insurance than would be required by your state’s laws. As you add more coverage, your rates get higher.
Do you need insurance before you lease a car?
Yes, you must have insurance before you can drive your car away from the leasing dealership. There are a few different ways to do this. You can purchase a new policy online while at the dealership. Or, if you know what kind of car you’re getting ahead of time, you can make it so your new policy starts on the day you pick your car up. Finally, you can just add your new car to an existing policy.
Methodology
policycentral calculated the cost of auto insurance for a leased vehicle using public rate data from Quadrant Information Services. Our data reflects the cost of insurance for a 30, 35, and 45-year-old male with a clean record, who drives a 2017 Toyota Camry.
We found the cost of a policy with limits in line with each state’s minimum required amounts of insurance. We compared the cost of minimum-coverage insurance with policies that had higher amounts of liability coverage, plus comprehensive and collision add-ons.
We used to the following limits for full coverage:
Bodily injury liability: $50,000 per person, $100,000 per accident
Property damage liability: $50,000 per accident
Uninsured/underinsured motorist: $50,000 per person, $100,000 per accident
Comprehensive: $500 deductible
Collision: $500 deductible
For our more comparison of policies with more complete coverage, we used the following limits:
Bodily injury liability: $100,000 per person, $300,000 per accident
Property damage liability: $50,000 per accident
Uninsured/underinsured motorist: $50,000 per person, $100,000 per accident
Comprehensive: $500 deductible
Collision: $500 deductible
Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.
