Car insurance for a leased car

Q: Do you have to have full coverage auto insurance to lease a car?

Yes. Lenders generally won’t allow you to drive off the lot until they know that you’ve purchased full coverage auto insurance.

What insurance is required for a leased vehicle?

When you lease a vehicle, you will be required to meet both your state's minimum requirements and those of your leasing company. That will include liability insuranceLiability insurance covers sums that an insured becomes legally obligated to pay because of bodily injuries or property damage, or financial losses caused to other people., comprehensive and collision coverage and anything else required by law in your state.

Collision coverage. This pays for damages to your car if you get into a wreck with another vehicle or an object, like a food truck or a telephone pole.

Comprehensive coverage. This pays for damage from a source other than a collision, such as weather, vandalism or an animal strike (which is not considered a collision by insurance companies).

Your state law may require:

Liability coverage. This covers the medical expenses for others when you are at fault in an accident as well as property damage to another car or other property. It's required by law in most states. In addition to state law liability requirements, your lessor may require that you carry higher limits, commonly 100/300/100 ($100,000 per person and $300,000 per incident for bodily injury and $100,000 for property damage).

Personal injury protection/medical payments. Some states require these no-fault coverage, which pay for your medical bills regardless of fault.

Underinsured and uninsured motorist coverage. A few states also require you to carry coverage to pay for injuries if you're involved in an accident with an uninsured or underinsured motorist.

You will also likely need gap insurance, a policy that pays the difference between what the insurance company will pay out if the car is totaled and what you still owe on your lease. Most leases require gap insurance, and some include it as part of the contract. Check with your leasing company to find out if you need to buy it separately.

How to get insurance for a leased car

You’ll get insurance for your leased car in the same way you do for a car you finance. You’ll comparison shop and research car insurance policies and decide what you think is the best.

If you already have car insurance you can easily add your newly leased car to the policy online, via your insurance company's app or over the phone.

You’ll probably need to get the insurance before you drive off the lot. If you want to add any extras, such as gap insurance, you can do that when you buy your policy or add it later.

Factors that affect your leased vehicle’s insurance rates

The factors that go into determining your leased vehicle’s insurance rates aren’t any different than a car you finance, except that lenders will insist that you have comprehensive and complete coverage (after all, it’s their car and not yours; you’re borrowing it).

Insurance underwriters take a look at factors such as…

Your credit score. Credit score is correlated with the risk of filing a claim, and it can be used to calculate rates in most states.
Driving history. Tickets and accidents on your record will impact what you pay for car insurance.
Years of driving experience. Drivers with more experience pay less for car insurance, because they are better able to avoid an accident.
Where you live. Because every state regulates insurance differently, your leased car might be insured much cheaper in one state than another. You also might find that you’re paying more in a city where there’s a ton of traffic and more accidents than in a rural part of the country, with fewer motorists.

How much does car insurance for a leased car cost in my state?

The cost of car insurance varies widely by state, but other factors also affect your rates. While you can look at average full coverage car insurance rates for a general idea, your driving record and the car you're leasing will make your rates vary.

How to save on insurance for leased cars

As noted, you’re going to have to spend a decent amount on insurance for leased cars. That’s just how it goes when you’re insuring a leased vehicle. Still, here are a few ideas:

Comparison shop. If you want cheap insurance for leased cars or the best insurance for leased cars, you’ll need to check around and compare car insurance policies. You want to look for policies that don’t just have reasonable rates but offer discounts, such as driving several years without an accident.
Work with an insurer that has a telematics program. Those are the devices you plug into your car, and if you’re a good driver, your insurer will see that. It’ll receive data that you don’t speed like crazy, and you don’t brake hard.
Pay your policy upfront rather than monthly. That can be a challenge for many people, but it can often save you around 9%, according to Insurance.com's discounts data.

FAQ: Leasing and insurance

Is car insurance higher for leased cars?

No, car insurance rates are not affected by whether the car is leased. However, if you previously carried liability-only coverage, the required addition of comprehensive and collision coverage will increase your rates, since full coverage is more expensive than liability only.

Can you lease a car with insurance included?

Generally, no, you have to buy your own car insurance. That said, some lenders will include gap insurance within the contract. So, you may not need to purchase gap insurance.

What should I do with my auto insurance after the lease ends?

You can cancel your insurance when the lease ends and you return the vehicle; however, if you are buying or leasing a new car to replace it, it's best to keep the coverage in place and replace the old car with the new on your policy. Ensure that the replacement car is covered before you drive.