What insurance do you need when leasing a car?

If you are leasing a car, you will need proper car insurance. Most car leasing companies require you to carry more than your state's minimum coverage requirements, so you will want to check with your leasing company to make sure you have proper coverage. If you are required to carry full coverage on your leased car, you may qualify for car insurance discounts that help you pay less on your monthly rates.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: Feb 25, 2022

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Here's what you need to know...

  • If you are leasing a car, you need to ensure that you are carrying at least your state’s minimum coverage requirements for auto insurance
  • Most leasing companies require that you carry full coverage car insurance on your vehicle
  • You may be eligible for a discount on insurance for your leased car 

If you are leasing a car, or if you know that you’ll be doing so in the future, you may be curious about how car leasing works with insurance.

Leasing a car and having that car covered by your insurance is quite simple, and you will want to ensure that the car you are leasing is properly covered if you are involved in an accident or your car is otherwise damaged. There are several different options available for coverage, so it’s important that you do your research on car leasing with insurance before making any final decisions.

What insurance do I need for a leased car?

Whether you are leasing a car or you own your vehicle, you will need to make sure that your car is covered before you take it out on the road. At the very least, you will need to ensure that your car is covered to meet your state’s minimum insurance requirement. 

Most states require both bodily injury liability and property damage liability coverage, though some states have additional requirements. If you are uncertain as to how much insurance you are required to have on your vehicle, you can check with your state’s department of motor vehicles (DMV).

When it involves leased car insurance requirements, you may need additional coverage based on lessor stipulations. Many leasing companies necessitate one or more of the following insurance coverages:

  • Collision – pays for damages to your leased car in the event of an accident
  • Comprehensive – covers damages to your leased car in the event of adverse weather conditions, theft, falling debris, and more
  • GAP – pays the difference in what your car is worth and the loan you have on your vehicle if it is totaled
  • Uninsured/underinsured – pays for coverage to your vehicle if someone else is at fault but does not carry the proper insurance

You could select additional coverage options on your leased vehicle if you would prefer, but it is unlikely that a leasing company would require more coverage than what is listed above. If you are uncertain as to the type and amount of coverage you need, speak with your leasing company.

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Is insurance more expensive for a leased car?

Car insurance for leased cars is not always more expensive than it is for a car that you own. The cost of insurance for a leased car actually depends on the type of vehicle you own and the kinds and amounts of car insurance coverage that you’re seeking. 

The table below displays the average annual rates for full coverage car insurance — which includes liability, comprehensive, and collision coverage — in each U.S. state.

Average Annual Full Coverage Rates by State
StateAverage Annual Full
Coverage Rates
Alabama$817.95
Alaska$1,048.60
Arizona$932.10
Arkansas$869.37
California$926.79
Colorado$898.79
Connecticut$1,108.67
Countrywide$954.99
Delaware$1,186.33
District of Columbia$1,307.62
Florida$1,206.46
Georgia$964.70
Hawaii$856.33
Idaho$656.95
Illinois$833.44
Indiana$724.65
Iowa$672.01
Kansas$819.14
Kentucky$904.39
Louisiana$1,326.78
Maine$679.56
Maryland$1,077.97
Massachusetts$1,075.35
Michigan$1,252.27
Minnesota$826.64
Mississippi$935.08
Missouri$825.40
Montana$842.54
Nebraska$778.81
Nevada$1,057.63
New Hampshire$777.98
New Jersey$1,353.96
New Mexico$896.58
New York$1,300.09
North Carolina$745.17
North Dakota$737.63
Ohio$741.11
Oklahoma$941.34
Oregon$855.57
Pennsylvania$934.34
Rhode Island$1,219.29
South Carolina$910.51
South Dakota$717.73
Tennessee$823.74
Texas$1,025.64
Utah$832.24
Vermont$737.67
Virginia$807.71
Washington$923.16
West Virginia$1,015.57
Wisconsin$696.11
Wyoming$816.71
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As you can see, rates vary significantly based on where you live. There are several additional factors that affect the rates that you’ll ultimately end up paying for auto insurance, so it’s important to shop around to find the best options for cheap car insurance in your area. 

Can I get insurance through the leasing company?

You probably will not be able to purchase car insurance through the leasing company, although some companies do offer GAP coverage on leased vehicles. Because there are not many car leasing options that include insurance, you will have to look elsewhere.

In most cases, you will need to shop around for free car insurance quotes online to find the proper car insurance for the vehicle you’re leasing. You can speak with family members and friends to determine what companies they use for car insurance and ask specific questions. It’s important to compare multiple quotes from various companies to ensure that you’re not overpaying for coverage on your leased car.

If you believe that you’ve found one or two companies you’re interested in purchasing a policy with, be sure to contact the companies and request direct quotes. You can also inquire as to whether or not there are any car insurance discounts for which you would be eligible. 

Can I get discounts on leased car insurance?

You may qualify for one or more discounts when seeking insurance for your leased car. This will likely vary from one company to the next, but there is no harm in asking whether it’s possible to save some money on your monthly insurance rates by applying for a discount.

Some of the most common car insurance discounts include:

  • Multi-policy
  • Multi-car
  • Vehicle safety
  • New car
  • Anti-theft devices
  • Good driver
  • Defensive driver
  • Good student
  • Paid-in-full

If you believe that you qualify for any of the discounts listed above, it can be advantageous to speak with an insurance representative to ask. You may be working with a company that offers additional discounts on coverage, so you can always inquire as to whether there are discounts that you are unaware of.

It is very important to ensure that your leased vehicle is properly insured to avoid having to pay out of pocket if something unfavorable happens. Take your time when you shop for coverage and ask questions if there’s something that you’re uncertain about. 

 

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