What insurance do you need for a leased car?
The auto insurance requirements are the same regardless of whether you own or lease your vehicle. However, leasing companies can sometimes require additional car insurance on a lease.
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UPDATED: Dec 13, 2022
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Dec 13, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- In most states, drivers are legally required to carry a minimum amount of insurance regardless of whether they own or lease their vehicle
- Leasing companies sometimes impose additional auto insurance requirements that can exceed state minimums
- Lessor-mandated insurance coverage and liability limit requirements can result in higher car insurance rates on a lease
Leasing a vehicle can offer drivers a lot of flexibility and benefits, but it can also come with a lot of responsibility and questions – especially regarding insurance.
Because accidents aren’t uncommon, when you’re leasing a car, insurance is important. In most states, drivers of all vehicles, whether leased or owned, are required to carry a minimum amount of car insurance. However, because insurance requirements can vary widely, it’s important to understand your legal and other obligations before signing a lease. Always check to see your state’s minimum auto insurance coverage requirements before insuring your vehicle.
In this article, we’ll explore the lease car insurance requirements every lessee should know about before driving it off the lot.
Table of Contents
Will my leased vehicle come with insurance?
Unfortunately, leased vehicles don’t automatically come with insurance. Instead, it’s up to the lessee to purchase insurance for their leased vehicle. Your coverage should comply with the laws of the state where your vehicle is registered and meet the requirements of your lease agreement.
When you lease a vehicle, the leasing company will require that the vehicle is insured before allowing you to drive it off the lot. However, the minimum amount of coverage you’ll have to purchase when leasing a vehicle will depend on the laws of the state where it’s registered.
In addition to complying with state laws, your lessor might have additional coverage requirements for insuring a leased vehicle. Keep reading to compare the types of car insurance you need for leased cars.
State Insurance Requirements
Although the laws governing auto insurance requirements vary between states, most require drivers to carry a minimum amount of insurance coverage. This typically includes liability insurance, which is usually offered in two primary forms:
- Property damage liability coverage. Pays for damage to other people’s property if you’re in an accident. Find the best property damage liability auto insurance companies.
- Bodily injury liability coverage. Pays for medical expenses for other people you injure in an accident.
Although it’s less common, some states also require drivers to carry uninsured/underinsured motorist coverage and personal injury protection (PIP) coverage.
It’s important to remember that even when your insurance coverage meets the state-mandated minimum coverage, it might not be enough to cover all damages if you’re in an accident. Because of that, it can be a good idea to consider opting for higher liability limits.
Lease Car Insurance Requirements
In addition to state-mandated auto insurance requirements, drivers of leased vehicles must also comply with their lessor’s insurance requirements.
Because leasing companies want to make sure their vehicles are protected, they often impose their own insurance requirements on lessees that can sometimes exceed state requirements.
Typically, this includes the following types of insurance coverage:
- Collision insurance coverage. Pays for repairs related to damage to your vehicle caused by a collision with another vehicle or object.
- Comprehensive insurance coverage. Pays for other types of vehicle damage that aren’t a result of an accident, such as theft, falling objects, bad weather, and natural disasters.
Beyond extra coverage, lessors sometimes also require that lessees purchase insurance liability limits that are higher than those mandated by state law.
GAP Insurance for a Leased Car
Because GAP insurance covers the difference between a financed vehicle’s actual value and the amount of money still owed on the vehicle, lessors sometimes require it.
GAP insurance can be helpful when leasing a new vehicle that will quickly depreciate after driving it off the lot, but it makes less sense when leasing a used vehicle that isn’t worth more than the amount owed on a lease.
When the lessor offers GAP insurance, it is usually in the form of an additional monthly fee or a one-time upfront charge at the time of signing the lease. Some auto insurance companies also offer GAP insurance and typically add the cost to your monthly insurance premium.
However, it’s important to remember that there are often limits to GAP insurance benefits, so it’s best to check your GAP policy to ensure that it meets your lessor’s requirements.
Read our article to find out more about GAP insurance on a financed car.
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Do you pay insurance on a leased car?
When you lease a vehicle, it’s your responsibility to pay the car insurance for leased cars. Your lease car insurance rates are based on various factors and can vary widely between insurers.
To ensure you get the best rates, shop around and compare quotes from different insurers in your coverage area.
Average Annual Liability and Full Coverage Auto Insurance Rates by State
States | Average Annual Liability Auto Insurance Rates | Average Annual Full Coverage Auto Insurance Rates |
---|---|---|
Alabama | $394.21 | $868.48 |
Alaska | $539.68 | $1,027.75 |
Arizona | $508.76 | $972.85 |
Arkansas | $394.13 | $906.34 |
California | $489.66 | $986.75 |
Colorado | $520.04 | $981.64 |
Connecticut | $650.94 | $1,151.07 |
Delaware | $799.30 | $1,240.57 |
District of Columbia | $628.82 | $1,330.73 |
Florida | $857.64 | $1,257.13 |
Georgia | $557.38 | $1,048.40 |
Hawaii | $458.54 | $873.28 |
Idaho | $344.29 | $679.89 |
Illinois | $446.72 | $884.56 |
Indiana | $382.68 | $755.03 |
Iowa | $299.18 | $702.46 |
Kansas | $358.24 | $862.93 |
Kentucky | $529.21 | $938.51 |
Louisiana | $775.83 | $1,405.36 |
Maine | $338.87 | $703.82 |
Maryland | $609.74 | $1,116.45 |
Massachusetts | $606.04 | $1,129.29 |
Michigan | $795.32 | $1,364 |
Minnesota | $456.82 | $875.49 |
Mississippi | $460.50 | $994.05 |
Missouri | $415.88 | $872.43 |
Montana | $386.29 | $863.52 |
Nebraska | $364.64 | $831.02 |
Nevada | $681.56 | $1,103.05 |
New Hampshire | $400.56 | $818.75 |
New Jersey | $869.57 | $1,382.79 |
New Mexico | $488.03 | $937.59 |
New York | $804.51 | $1,360.66 |
North Carolina | $359.42 | $789.09 |
North Dakota | $298.18 | $773.30 |
Ohio | $397.11 | $788.56 |
Oklahoma | $461.01 | $1,005.32 |
Oregon | $584.13 | $904.83 |
Pennsylvania | $499.06 | $970.51 |
Rhode Island | $759.80 | $1,303.50 |
South Carolina | $527.09 | $973.10 |
South Dakota | $300.22 | $766.91 |
Tennessee | $413.91 | $871.43 |
Texas | $528.75 | $1,109.66 |
Utah | $497.53 | $872.93 |
Vermont | $343.12 | $764.02 |
Virginia | $425.61 | $842.67 |
Washington | $596.67 | $968.80 |
West Virginia | $491.83 | $1,025.78 |
Wisconsin | $374.37 | $737.18 |
Wyoming | $321.04 | $847.44 |
National Average | $538.73 | $1,009.38 |
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Is insurance more expensive for leased cars?
As the driver of a leased vehicle, you might wonder, “Is insurance cheaper on a lease?” The short answer is — it’s complicated.
Although the cost of insuring a vehicle isn’t dependent on whether or not you own or lease it, your rates can be impacted by factors such as higher coverage limits or additional coverage that your lessor might require.
Maximum deductible restrictions, or limits on the amount of money you must pay out of pocket before your insurance applies, are sometimes also required by lessors. Unfortunately, these restrictions can lead to an increase in your monthly auto insurance rates.
How to Get Auto Insurance for Leased Cars
Follow the steps below to show proof of insurance on a leased car to your lessor:
- Ask the leasing company what the minimum insurance requirements are for the vehicle you’d like to lease.
- Determine whether you want to add additional coverage, like GAP insurance, to your policy.
- Shop around and compare quotes for car insurance.
- Purchase your preferred policy and ask the insurer to fax or email proof of insurance to you or the leasing company.
- Provide the leasing company with proof of insurance, sign the lease, and enjoy your new vehicle.
For drivers seeking alternatives to leasing a car, vehicle subscription services can be an excellent alternative.
Offered by several major car dealers, including Canvas (Ford), Care (Volvo), and Book (Cadillac), car subscription services allow drivers monthly access to an insured vehicle with maintenance costs included in a monthly subscription fee without long-term commitments.
The Bottom Line on Insuring Leased Vehicles
Car insurance is required to drive a car in most states, regardless of whether you own or lease your vehicle. Although car insurance rates aren’t based on the ownership status of your car, the coverage requirements mandated by leasing companies, which sometimes exceed state insurance minimums, can lead to higher premiums.
Because insurance requirements and rates for leased vehicles can vary widely, it’s important to shop around and compare quotes before signing a lease. Use our free comparison tool below to get auto insurance quotes from local companies.
Frequently Asked Questions
Am I required to insure a leased or financed vehicle?
If you lease a vehicle or owe money toward a car loan, your lessor or lender will likely require you to insure your vehicle. These requirements can include meeting state-mandated insurance requirements and any other additional insurance, like collision or comprehensive coverage. You might also be required to name your lessor or lender on your insurance policy.
To find out the insurance requirements associated with your leased or financed vehicle, check with your lender or leasing company.
Is it more expensive to insure a leased car?
Is lease car insurance more expensive? Not necessarily. It’s important to point out that auto insurance rates aren’t based on the ownership status of a vehicle. However, lessor-imposed requirements, such as higher coverage limits or deductible restrictions, can result in higher quotes.
How much does insurance cost for a leased vehicle?
Because car insurance rates depend on various factors, including age, location, vehicle make and model, and level of coverage, the cost of insuring a vehicle can vary widely from person to person. To find the best rates for your coverage needs, shop around and compare quotes from several insurers before making a decision.
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Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.