Leasing companies usually require you to purchase full coverage when you lease a car, including comprehensive, collision, and liability limits of 100/300/50 or higher.
In most situations, the owner of a vehicle is responsible for insuring it. However, when you lease a car you are required to purchase car insurance coverage even though you don’t own it.
Ready to shop car insurance?
While every driver needs to purchase car insurance, people driving a leased vehicle often have different insurance requirements than people who own their car outright.
The leasing company will require you to purchase both collision coverage and comprehensive coverage, often referred to as a full coverage car insurance policy.
Most leases require you to have at least 100/300/50 levels of liability coverage.
People who are leasing a vehicle are usually required to have deductibles no higher than $500 or $1,000 on their comprehensive and collision coverage.
Drivers with leased vehicles will also likely be required to buy gap coverage, which pays the difference between your loan and the value of your vehicle in the event of a total loss.
Every car is required to have insurance before you can drive it off the lot, but the type and amount of insurance you need will depend on your situation.
While people without car payments or lease payments can choose to buy state minimum levels of coverage, drivers who lease cars are required by the lender to purchase full coverage insurance with liability levels of at least 100/300/50. That’s insurance that includes:
Bodily injury liability: Bodily injury liability coverage pays for injuries you cause to other people in an at-fault accident. Most leases require you to have $100,000 in coverage per person and $300,000 in coverage per accident for bodily injury liability.
Property damage liability: This covers damages you cause to other people’s property in an at-fault accident. Most leases require you to carry at least $50,000 in property damage liability.
Comprehensive coverage: This coverage pays for non-collision damage to your vehicle like fire, theft, and animal-related damages. Most leases require you to have a maximum deductible of $500 or $1,000.
Collision coverage: This coverage pays for collision damage caused to your vehicle in an accident, no matter who is at fault. Most leases require you to have a maximum deductible of $500 or $1,000.
Gap insurance: This pays the difference between your loan and the value of your vehicle in the event of a total loss. Because new cars have such a significant drop in value when they are purchased or leased, gap insurance can keep you from paying thousands of dollars out-of-pocket if your car is totaled.
Depending on the laws in your state, that coverage may also include:
PIP: Personal injury protection pays for your medical bills when you are in an accident, no matter who is at fault. Most states don’t require PIP coverage, but those that do have a wide range of required coverage limits that can dramatically impact your insurance rates.
MedPay: This is a small amount of coverage, typically $5,000 or less, that can help pay for medical bills for yourself and any passengers who may be in the car with you in the event of an accident.
Uninsured/underinsured motorist coverage: This coverage provides coverage for your medical expenses if you are hit by a driver who doesn’t have insurance or who doesn’t have enough insurance to cover your medical expenses.
Your lease will probably have specific requirements you need to meet that will vary from state-to-state and from one lender to another, so it is important to read the details of your lease carefully before making a purchase.
Ready to shop car insurance?
Leased cars aren’t charged higher rates than financed or owned vehicles, but they are required to buy more coverage than a car that isn’t being leased. The amount of money you pay for insurance is , in part, a reflection of the amount of insurance you buy.
The chart below shows the average annual premium based on coverage level:
|Coverage level||Average annual premium|
|Full with 100/300 BI||$1,822|
|Full with 50/100 BI||$1,721|
While higher levels of coverage are more expensive than lower levels of coverage, the amount you pay can vary significantly from company-to-company. The chart below shows the rates for ten major insurance companies based on full coverage with 100/300 levels of bodily injury liability:
|Company||Average annual premium|
USAA is the most affordable option at $1,191 per year, while Farmers is the most expensive choice at $2,109 per year. This is an annual difference of $918, which shows how important it is to compare quotes between multiple companies to make sure you are paying the lowest possible rate.
Because the leasing company is the technical owner of the vehicle, when you lease a car you will be required to list them on your insurance policy as a loss payee. This means that the leasing company will be the one who receives a payout from the insurance company in the event the vehicle is damaged or totaled.
The person who is leasing the vehicle pays to insure it. If you are in a unique situation (you are driving a car leased by your employer, your child is driving a car you are leasing under your name, etc.) you may have another arrangement, but in every instance the person listed as the first named insured on the policy is the one held responsible for making the payment.
Leasing a car allows you to drive the newest model car with little or no down payment. However, you will face potential extra costs (mile overages, early termination, etc.) and you will be required to have much higher levels of insurance coverage. In the long run, leasing costs more than buying a car outright.
At the end of a car lease you are typically left with three options: trade it in for another lease, buy it outright, or return the car without getting a replacement. Each of these options has benefits and drawbacks, so do your research carefully before making a decision.
Policygenius has analyzed car insurance rates provided by Quadrant Information Services for every ZIP code in all 50 states, plus Washington, D.C.
For full coverage policies, the following coverage limits were used:
Bodily injury liability: 50/100
Property damage liability: $50,000
Uninsured/underinsured motorist: 50/100
Comprehensive: $500 deductible
Collision: $500 deductible
In some cases, additional coverages were added where required by the state or insurer. Bodily injury liability limits of 100/300 were used to find average rates where indicated.
Rates for overall average rate, rates by ZIP code, and cheapest companies determined using averages for single drivers age 30, 35, and 45. Our sample vehicle was a 2017 Toyota Camry LE driven 10,000 miles per year.
Rates for driving violations and “poor” credit were determined using average rates for a single male 30-year-old driver with a credit score under 578.
Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.
More related articles