Car Insurance for Leased Cars (2024)
- Expertise: Auto insurance, home insurance and renters insurance
- Education: Sonoma State University (BA in English)
Aaron Besson has worked at LendingTree for more than seven years and has been a staff writer for the last five years. He specializes in producing research-backed content about auto, home and renters insurance. Aaron enjoys the deep dig into insurance data to get the right answers to hard questions. His work has been cited by CBS, iHeart Radio, the Sacramento Bee and Yahoo.
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.
Car insurance required when leasing
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.
Gap insurance
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.
The cost of car insurance on a leased car
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
| State | Average 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
Frequently asked questions
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.