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Higher Auto Insurance Costs for Leased Vehicles

Here's what you need to know...
  • Leasing a vehicle usually costs more to insure than a vehicle you own
  • When you lease a vehicle you need to carry at least $100K per person bodily injury liability coverage, $300K total bodily injury liability coverage if multiple people are injured, and$50K property damage liability coverage
  • You may also be required to carry gap insurance

Leased vehicles cost more to insure than vehicles you own because most lease agreements require the lessee to obtain much higher limits of coverage along with low physical damage deductibles.

Lien holders want to make sure they are protected from any liability in the event you cause an accident.

While you will pay quite a bit more for insurance there are still many reasons why leasing a vehicle may be the right choice for you.

Are you planning to lease a vehicle and need insurance coverage? Click here and enter your zip code above for a list of FREE online car insurance quotes from several major insurance providers.

What level of coverage is typically required for a leased vehicle?


Most lease agreements require coverage that is significantly higher than the minimum insurance requirements for most states.

When you lease a vehicle you need to carry at least $100K per person bodily injury liability coverage, $300K total bodily injury liability coverage if multiple people are injured, and$50K property damage liability coverage.

This is typically known as a 100/300/50 policy.  In addition to the 100/300/50 coverage that is almost always required, several other requirements may be indicated. These include the following:

  • A maximum deductible of $500
  • Purchasing comprehensive coverage that also covers losses due to fire, theft, vandalism, and collisions with animals
  • Gap insurance will pay the remainder of your lease agreement if the car is totaled
  • Regular insurance will only cover the cost of vehicle replacement which will be turned over to the lien holder

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If insurance costs so much more, why lease a vehicle?

There are still several reasons why you may want to consider leasing versus purchasing a car despite the higher rates you will pay for your insurance:

  • A leased vehicle provides you with a decent tax deduction. Lease payments can usually be written off while car loan payments are not deductible
  • Additionally, many people enjoy the freedom leases give them to get new cars more often. Most lease agreements are for 36 months or less allowing the lessee to have a brand new car every three years
  • A final benefit of a lease is that the vehicle is almost always under warranty for the term of the lease saving you money in general repair costs and tune ups

If I do decide to lease a vehicle what are some ways I can save on my insurance?

Jar of coins

While you will have to comply with the lien holder’s requirements for insurance if you want to lease, there are still several ways you can save money on your insurance premium.

Following is a list of ways you can lower your rates even with a leased vehicle:

  • Do your homework and investigate insurance rates for different vehicles before you decide on one to lease. Depending on the vehicle you choose your premium could be significantly higher or lower. Four-door sedans are viewed as more conservative vehicles and cost less to insure than two-door sportier cars
  • Consider using the same insurance provider as you are currently using for your homeowner’s or life insurance. By bundling insurance policies with the same company you can often save yourself a lot of money
  • Lease a car that comes equipped with several safety features. Insurance providers often give discounts for added safety features such as anti-lock brakes and anti-theft devices
  • Car insurance companies often charge less for cars that are driven under a certain amount of miles annually. For leased vehicles, you often cannot go over a certain mileage anyway so you may be eligible for a low-mileage discount
  • If you have access to a garage or even a driveway you will save more money compared to parking your car on the street
  • If you can manage to pay your premium each year in one lump sum you will save more money than paying in monthly or bi-monthly installments
  • Some insurance companies offer discounts if you agree to take a safe driving course
  • Get your credit rating in check. This means staying up to date on debt payments. Most insurance companies now use credit scores as a means of determining who is a higher or lower risk factor to insure

When determining if you will lease or purchase a vehicle you need to weigh the pros of leasing versus the cons of insuring a leased car. There are many ways you can save even when you must operate within the terms of your lease agreement.

It is best to get started by shopping around and getting quotes from several insurance providers even before visiting the car dealerships. By doing a little legwork you can save yourself a bundle of money in the long run.

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