Car Insurance for Leased Vehicles: What to Know

Auto-Owners and Erie offer the lowest average monthly rates for insurance on a leased car.

Kim Porter
Written byKim Porter
Kim Porter
Kim Porter
  • Co-authored the book “Future Millionaires’ Guidebook”

  • 13 years writing personal finance content

A former chief copy editor at Bankrate and past managing editor at Macmillan, Kim specializes in writing easy-to-understand, actionable personal finance content.

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Danny Smith
Edited byDanny Smith
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Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

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Updated July 11, 2024

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Drivers using Insurify have found quotes as cheap as $35/mo for liability only and $41/mo for full coverage.

*Quotes generated for Insurify users within the last 10 days. Last updated on July 11, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from July 11, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

*Quotes generated for Insurify users within the last 10 days. Last updated on July 11, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from July 11, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

When you lease a car, you’re borrowing it in exchange for making monthly payments. Typically, you can either return the car or purchase it at the end of the lease period. A financing arrangement is similar — though once you pay off the loan, you own the car and don’t have to return it.

Lease agreements usually offer lower monthly payments, a manufacturer’s warranty, and the chance to drive a brand-new vehicle.[1] The insurance you buy for a leased car is the same as for cars you purchase or own outright, but your leasing company may require you to carry additional coverages, which may increase your overall cost.

Quick Facts
  • Auto-Owners offers full-coverage leased-car insurance for $109 per month, on average. 

  • North Carolina is the cheapest state for leased-car insurance, at $92 per month.

  • Leasing companies often require you to carry gap insurance.

What is leased-car insurance?

Leased-car insurance is the same as the policies insuring most other cars on the road. It protects you after any covered incident, like bodily injury and property damage. Leased-car insurance policies must include at least the minimum coverage required in your state.

Every state has different rules, but most require drivers to carry certain minimum limits of liability insurance, which covers damage to the other person’s vehicle and medical costs if you cause an accident. For example, car insurance policies in Florida must include at least $10,000 in property damage liability protection per accident and $10,000 in personal injury protection.[2]

Michigan requires much more coverage, however. Drivers must carry at least $20,000 in bodily injury liability coverage per person and $40,000 per accident, along with $10,000 in property damage liability protection outside the state and $1 million within the state. Michigan car insurance policies also must include personal injury protection.[3]

On top of the minimum insurance required in your state, the leasing company may require you to buy additional coverages, such as comprehensive and collision coverage. These protect you after a covered incident, like a collision or theft. It also protects the leasing company’s financial interests in the car.[4]

Learn More: Minimum Car Insurance Requirements by State

Learn More: Minimum Car Insurance Requirements by State

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What coverages do leasing companies require?

Leasing companies require you to carry car insurance to ensure someone will repair the car if it’s stolen or involved in an accident. Research which types of insurance you need to buy when comparing leasing options. You’ll typically need to purchase your state’s minimum liability insurance along with the following coverages.[4]

  • illustration card https://a.storyblok.com/f/162273/x/169fdfde11/liability-coverage.svg

    Collision insurance

    Collision insurance pays to repair your car when it’s damaged in an accident, whether it involves another car or an object such as a tree or utility pole. The policy may also cover any damage from driving over potholes or when the vehicle rolls over, even if another object isn’t involved. This type of coverage usually requires a deductible.[5]

  • illustration card https://a.storyblok.com/f/162273/x/665da91bf7/comprehensive-coverage.svg

    Comprehensive insurance

    Comprehensive insurance covers damage from things other than a collision, such as fires, theft, vandalism, or natural events like hail. This type of coverage also usually requires you to pay a deductible.[5]

  • illustration card https://a.storyblok.com/f/162273/x/5285c4cd74/uninsured-or-underinsured-motorist-coverage.svg

    Uninsured/underinsured motorist insurance

    Uninsured motorist coverage pays for your car repairs and medical bills if someone driving without insurance injures you or your passengers or damages your car. Underinsured motorist coverage is similar, but it kicks in when another person causes damage or injuries to you and doesn’t have enough coverage to pay for all your costs.

    Not all states require drivers to carry these coverages, but leasing companies may still require you to purchase them.

  • illustration card https://a.storyblok.com/f/162273/x/abffe6238f/financial-protection.svg

    Gap insurance

    Leasing companies usually require gap coverage, which pays off the “gap” between what you owe on the car and your insurance coverage after the car is totaled or stolen.

    Dealers will typically buy a gap insurance policy on your behalf and include a gap waiver in your loan, so if your leased car is totaled, you won’t be responsible for paying the gap amount.[4]

  • illustration card https://a.storyblok.com/f/162273/x/4c9753bdbe/medical-payments.svg

    Personal injury protection (PIP) insurance

    Personal injury protection (PIP) insurance can pay for medical costs for you or your passengers when you’re involved in a car accident, regardless of who’s at fault. PIP coverage is required in some states, but even if it’s not mandatory where you live, your leasing company may require you to buy it.

Read More: How Much Car Insurance Do You Need?

Read More: How Much Car Insurance Do You Need?

How much does car insurance cost for leased vehicles?

The average cost of full-coverage car insurance is $253 per month in the U.S., based on Insurify data. Gap insurance typically adds another $20 each year.

How much you pay for full-coverage car insurance varies based on factors such as your driving record, age, gender, and where you live. Insurance companies consider this information to determine how likely you are to file a claim. And the factors that affect car insurance rates apply whether you lease, finance, or own your car outright.

The table below shows the average cost of full-coverage car insurance across the U.S. and how gap coverage affects premiums.

Type of InsuranceAverage Monthly CostAverage Annual Cost
Full coverage$295$3,540
Gap coverage$1.70$20
Total$296.70$3,560
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.

How to get car insurance for a leased car

When you lease a car, you should take the following steps to get insurance:

  • Contact the leasing company. Ask about its minimum insurance requirements for your leased car.

  • Determine if you want extra coverage. Decide whether to increase your coverage limits or add anything that’s not required, such as roadside assistance.

  • Compare car insurance quotes. Every car insurance company has a different way of setting rates, so get multiple quotes and look for discounts.

  • Buy the policy. Once you choose the car insurance policy that fits your budget and includes the coverages you need, you can purchase it.

  • Show proof of coverage. Your leasing company may ask for a copy of the policy to prove you have the minimum amount of required coverage.

Cheapest companies for leased-car insurance

When you lease a car, you choose which insurer you buy car insurance from. Rates vary widely from one company to the next, so it’s a good idea to get multiple quotes.

Auto-Owners offers the cheapest average monthly quote for full-coverage car insurance — $89 cheaper than Clearcover, the most expensive option.

Insurance CompanyAverage Monthly Quote: Full CoverageWith a Speeding TicketWith an Accident
Auto-Owners$109$146$156
Erie$132$177$189
Root$133$179$191
USAA$152$203$217
Travelers$172$230$246
State Farm$175$235$250
GEICO$178$239$255
Nationwide$182$244$260
Elephant$193$258$275
Clearcover$198$265$282
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.

Recent quotes for other Insurify users

Insurify’s drivers have found rates ranging from $41/mo. to $119/mo. in the last few days

*Quotes generated for Insurify users within the last 10 days. Last updated on July 11, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from July 11, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

*Quotes generated for Insurify users within the last 10 days. Last updated on July 11, 2024

Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from July 11, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

Average leased-car insurance rates by state

Car insurance rates vary based on your area’s claims history. Urban areas typically see more accidents, vandalism, and theft, so if you live and park your car in a busy city, you’ll likely pay more than drivers in suburban or rural areas.[6]

StateAverage Monthly Quote: Full CoverageFull Coverage with a Speeding TicketFull Coverage with an Accident
Alabama$184$247$264
Alaska$158$212$226
Arizona$225$302$322
Arkansas$199$266$284
California$217$291$311
Colorado$233$312$333
Connecticut$284$381$406
Delaware$303$405$433
Florida$408$547$584
Georgia$294$394$420
Hawaii$110$147$157
Idaho$144$193$206
Illinois$165$222$236
Indiana$141$189$202
Iowa$154$207$220
Kansas$179$240$256
Kentucky$277$371$396
Louisiana$367$492$525
Maine$147$197$210
Maryland$307$412$439
Massachusetts$175$234$250
Michigan$353$473$505
Minnesota$179$240$256
Mississippi$200$268$287
Missouri$227$304$325
Montana$155$207$221
Nebraska$185$248$265
Nevada$357$478$511
New Hampshire$98$131$140
New Jersey$289$387$414
New Mexico$153$205$219
New York$457$613$654
North Carolina$92$123$131
North Dakota$140$188$200
Ohio$155$208$222
Oklahoma$196$262$280
Oregon$205$275$293
Pennsylvania$188$252$269
Rhode Island$284$381$407
South Carolina$256$343$366
South Dakota$197$265$282
Tennessee$162$217$231
Texas$242$324$345
Utah$182$244$260
Vermont$162$217$231
Virginia$196$263$281
Washington$198$265$282
Washington, D.C.$293$392$418
West Virginia$189$253$270
Wisconsin$173$232$247
Wyoming$150$201$214
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.
Check Out: Car Insurance Rates by State

Check Out: Car Insurance Rates by State

Leased-car insurance FAQs

Finding insurance for a leased car can be confusing. You may find this additional information helpful as you research insurance coverage options.

  • What happens if you get into an accident in a leased car?

    Your leasing company will require you to carry insurance on a leased car, and it’ll likely require you to buy collision and comprehensive coverage as well. These coverages should pay for most damages if you get into a car accident while driving your leased vehicle.

  • What factors affect insurance rates for a leased car?

    Your age, gender, driving history, and location can all affect car insurance rates — whether you lease, finance, or own the car. Other factors may affect your rates, too.

     “Cars that have larger engines or are more prone to theft cost more to insure,” says Loretta Worters, vice president of media relations at the Insurance Information Institute. “Certain states are more prone to bad weather, such as hail in Texas.” You may pay more for comprehensive insurance if some of these extra factors are relevant to you and your vehicle.

  • Is insurance cheaper on a leased or financed car?

    No. Insurance is typically more expensive on a leased car.

    “You are required to buy (more) coverage on a leased or financed car than if you own it yourself,” Worters says. “For example, if you owned (the car) outright, you could forgo certain coverages not required by law, such as comprehensive insurance.”

  • Does leasing a car build credit?

    Yes. Leasing a car can help you build credit. The leasing company should report your lease agreement as a loan to the credit bureaus. Those agencies then add the loan information to your credit reports.

    Credit-scoring bureaus like FICO may use the information in your credit reports when calculating your credit scores. Payment history is an important part of your credit score, so making on-time payments each month can help keep your credit strong.

  • What are the pros and cons of leasing a vehicle?

    Leasing allows you to drive brand-new cars and upgrade them every few years. You typically won’t have to put down a large amount up front, and monthly payments are often lower than financing payments. Some leases provide limited coverage under a manufacturer’s warranty, and you may have the option of buying the car when the lease is up.

    But leasing has downsides, too. “Most companies restrict your mileage and have other conditions you must follow, which you wouldn’t have to do if you owned the car outright,” Worters says. “You’ll also be making monthly payments the entire time you drive the car, while financing allows you to eventually pay off the auto loan and own the vehicle outright.”

Sources

  1. Nolo. "Car Leasing: Maintenance, Repairs, and More."
  2. Florida Highway Safety and Motor Vehicles. "Florida Insurance Requirements."
  3. Michigan Department of Insurance and Financial Services. "What auto insurance coverage do I have to purchase?."
  4. Insurance Information Institute. "Insuring a leased car."
  5. Insurance Information Institute. "What is covered by collision and comprehensive auto insurance?."
  6. Insurance Information Institute. "What determines the price of an auto insurance policy?."
Kim Porter
Kim Porter

Kim Porter is a writer and editor who's been creating personal finance content since 2010. Before transitioning to full-time freelance writing in 2018, Kim was the chief copy editor at Bankrate, a managing editor at Macmillan, and co-author of the personal finance book "Future Millionaires' Guidebook." Her work has appeared in AARP's print magazine and on sites such as U.S. News & World Report, Fortune, NextAdvisor, Credit Karma, and more. Kim loves to bake and exercise in her free time, and she plans to run a half marathon on each continent.

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

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