What insurance do you need for a leased car?

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.

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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Learn more about what factors affect your car insurance rates.

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.

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