How to Compare Car Insurance Quotes 2024
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

Car Insurance for Leased Cars (2024)

Published on:
Content was accurate at the time of publication.

Leasing companies usually require full-coverage car insurance and sometimes gap insurance when you lease a car. They do this to protect their own end of the investment during the lease period.

Full-coverage insurance covers damage to your car. Gap insurance covers the difference between the amount you owe on the car and the loss settlement amount granted after a total loss.

Find the Cheapest Car Insurance Quotes in Your Area

You need to have certain kinds and amounts of car insurance while leasing a vehicle. The state you live in requires you to have liability coverage. The dealership that holds your lease will require collision and comprehensive, or full coverage, too.

Liability car insurance

Also known as minimum car insurance, liability car insurance covers injuries and property damage you cause to others in an accident. Every state has its own liability car insurance limits drivers must have to drive legally.

There are two types of coverage in liability car insurance:

  • Bodily injury coverage: This coverage type pays the medical expenses of others you injure in an accident.
  • Property damage coverage: This coverage handles repairs or replacement of others’ property you damage.

Full-coverage car insurance

Full-coverage car insurance combines liability coverage with collision and comprehensive coverage. Collision coverage pays to repair your own car after an accident, while comprehensive pays for non-collision damages, such as a falling branch, as well as car theft and vandalism.

When leasing a car, you’re renting the vehicle from a dealership for a set amount of time and/or mileage. The lessor requires you to carry full coverage to protect their own investment, as liability car insurance only covers repairs to someone else’s car.

Also known as “guaranteed asset protection,” gap insurance covers the difference between the actual cash value of your car if it’s totaled or stolen and how much you owe on your lease agreement at that time.

Say you owe $15,000 on your car lease and you get into an accident that totals your car. With depreciation, your insurance company decides that the actual cash value of your car is $9,000, which would go to your leasing dealership.

Without gap insurance, you would need to pay the dealership the remaining $6,000. With gap insurance, it would handle the $6,000.

The dealership you’re leasing from may require you to carry gap insurance. Even if it doesn’t, it’s a good idea to get it. A car starts depreciating in value the moment you drive it off of the lot. If you’re in an accident that totals your car, gap insurance could save you thousands of dollars.

To get an idea of what insurance will cost for your leased vehicle, look at the average rate for full-coverage car insurance in your state.

Cost of insurance on a leased car by state

StateAverage full coverage cost
Alabama$1,979
Alaska$1,635
Arizona$2,683
Arkansas$1,879
California$1,867
Colorado$2,542
Connecticut$2,346
Delaware$2,482
Florida$2,990
Georgia$1,832
Hawaii$1,643
Idaho$1,227
Illinois$2,109
Indiana$1,511
Iowa$1,663
Kansas$1,991
Kentucky$2,295
Louisiana$2,719
Maine$1,100
Maryland$2,051
Massachusetts$2,068
Michigan$4,638
Minnesota$1,884
Mississippi$1,796
Missouri$1,908
Montana$2,174
Nebraska$1,909
Nevada$2,958
New Hampshire$1,146
New Jersey$2,236
New Mexico$1,953
New York$2,030
North Carolina$1,305
North Dakota$1,858
Ohio$1,329
Oklahoma$2,119
Oregon$2,115
Pennsylvania$1,861
Rhode Island$2,636
South Carolina$1,808
South Dakota$2,016
Tennessee$1,554
Texas$1,833
Utah$2,261
Vermont$1,232
Virginia$1,598
Washington$1,534
Washington DC$2,082
West Virginia$1,701
Wisconsin$1,540
Wyoming$1,437

Other factors that can affect the rate for insurance on your leased car:

  • Make and model of the car
  • Your ZIP code
  • Your insurance claim history

Methodology

LendingTree obtains rates from insurance company filings reported to Quadrant Information Services. Rates shown in this article are based on an analysis of more than 800,000 car insurance quotes for sample drivers in every U.S. ZIP code. Your rates may vary.

Unless stated otherwise, our sample driver is a 30-year-old man with good credit and no tickets, accidents or DUIs driving a 2015 Honda Civic EX.

Minimum liability policies provide liability coverage with the state’s required minimum limits.

Full coverage policies include the following limits and deductibles:

  • Bodily injury liability: $50,000 per person, $100,000 per accident
  • Property damage liability: $25,000
  • Collision: $500 deductible
  • Comprehensive: $500 deductible

Auto dealerships usually require you to get full-coverage car insurance as part of their lease agreement. They do this to protect their part of the investment.

A dealership’s requirement for full-coverage car insurance is more expensive than liability insurance, so that will increase your cost for insurance. Also, it’s not uncommon for dealerships to require you to get specific limits of full coverage, which can raise the cost of auto insurance more.

Gap insurance isn’t often required by dealerships as part of a lease agreement. However, it is a good idea to consider, especially if you’re leasing a brand-new car.