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Leasing a car can be a good option for someone looking for something shorter term than buying a car, whether it be brand new or pre-owned. But what does this mean for getting an auto insurance policy? Cars bought under a lease agreement have their own set of car insurance requirements. You shouldn’t risk going uninsured just because you don’t own the car.
Regardless of whether you’re financing a car with monthly payments or buying a new vehicle from a dealership, we recommend that every driver secures sufficient coverage. With Insurify, we can help you compare car insurance rates from hundreds of reliable insurance companies on the market. Use our tools to get your free quote today in a matter of minutes!
On average, drivers who lease their cars pay $275 per month for car insurance.
Drivers who lease their vehicles are usually required to purchase gap insurance and often are required to buy a full-coverage car insurance policy.
Drivers in Hawaii, New Hampshire, and Wyoming see the cheapest rates on average for insurance on a leased car.
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Cheapest Car Insurance Companies for Leased Vehicles
How much is car insurance on a leased car?
Car insurance for drivers who lease their car is typically a bit more expensive than insurance for drivers who own their vehicles. On average, drivers of leased cars pay $275 per month in car insurance premiums, while drivers who own their cars pay an average of $156 per month.
Even though car insurance tends to be pricier for leased vehicles, there are still great ways to save on your auto insurance policy. Luckily, Insurify put together a list of the cheapest car insurance quotes for leased cars. Keep in mind that these are just average rates and that there are always a number of ways to save with great discounts from insurers.
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How much does car insurance cost for leased vehicles?
There can be many benefits to choosing to lease a car and pay for it in monthly installments rather than purchasing one. But a downside is that the cost of insurance is a bit higher for leased vehicles than for owned ones. On average, drivers of leased cars pay $275 per month in insurance premiums, compared to just $156 for drivers who own their cars.
But why does car insurance cost more for leased vehicles? It’s not because insurance providers just decide to charge more for car insurance coverage on leased cars. It’s because leasing companies have different car insurance requirements that drive up the cost of your policy. These vary by state, driver, and type of car you’re driving.
Leasing companies usually require your car insurance policy to include comprehensive and collision insurance. On top of this, they might also ask for additional coverage and impose higher coverage limits, as well as a maximum deductible. A deductible is the amount of money that you are responsible for paying out of pocket when you file a claim.
In most cases, leasing companies require that your insurance covers much more for leased vehicles. Because lease terms tend to be temporary, there’s a lot more at stake for car dealerships, which essentially loan out cars that are paid for in monthly lease payments, than for people who might pay for a car entirely up front.
Even though it costs more, full-coverage car insurance includes more protection if your vehicle is damaged. This gives peace of mind to not only the driver but leasing companies, too. The unique combination of collision, comprehensive, and liability coverages help pay for everything from personal property damage to bodily injury liability after an accident.
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Insuring Leased Vehicles
Since leasing companies prioritize the value of the car, they require more thorough car insurance policies that cover damage much more than the average policy. They usually require policyholders to have at least $100,000 per person and $300,000 per occurrence in liability coverage, in addition to at least $50,000 in property liability insurance.
While the auto insurance rates for leased cars are significantly higher than most state minimum requirements, the benefit is that you get much more protection in motorist coverage. There may be higher limits when it comes to car insurance policies with leased vehicles, but at least you know you will never be underinsured when behind the wheel.
There are also other significant pros to deciding to lease a car rather than own one:
When you lease a car, you just borrow the car from the dealership (the lender or lessor) for the lease term. Most leases typically last two to three years. This is a good option for people who like the feeling of consistently getting a new vehicle.
If you are staying in a place temporarily, leasing a car is a good short-term solution. Most cars suffer depreciation the second they leave the lot. You do not have to worry about reselling your car lower than the price you bought it if you lease. This way, you can save money and drive a new car.
In most cases, there is little or no down payment needed. You can negotiate the cost of your car payment, which you pay in monthly installments to cover the length of the lease contract.
Since you don’t own the car, you don’t have to worry about the paperwork behind having an asset. This can help you save on sales tax.
Under a lease contract, the car remains under warranty. This way, you don’t have to pay as much for repairs.
Ultimately, you get to drive a nicer car that is almost always new for lower monthly payments than buying a car.
One downside, though, is that it is unlikely that you get to own the car when your lease agreement is up. Although some car dealerships now offer a way for you to purchase the car after leasing it, this is not always the case.
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Cheapest States for Car Insurance for Leased Vehicles
Residents of Hawaii save big on their car insurance policies if they decide to lease. Hawaii clocks in as the cheapest state to get insurance coverage on a leased car. If your state is more expensive, know that companies usually offer some great discounts for things like having a clean driving record or bundling a policy like homeowners insurance with your auto insurance.
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Insurance Requirements for a Leased Car
Deciding to lease a car instead of purchasing one has its pros and cons. While you get the benefit of driving a nicer, newer car at lower monthly rates, policyholders often find themselves paying more for leased cars. Usually, the insurance requirements for a leased car mandate much more robust coverage than the state minimum.
Common State and Lessor Requirements
In most cases, lessors (also known as lenders) and most leasing companies have minimum requirements for policies. This also depends on each state’s unique laws, but at the very base, policyholders usually need to have collision insurance, comprehensive coverage, personal injury protection, and liability insurance. It may be pricey, but you’ll never be underinsured.
This way, you’re covered in case of a car accident and won’t be left paying for repairs or medical bills out of pocket. It also protects you against property damage liability, in addition to helping against other mishaps like fire, theft, and vandalism. Some companies might also require higher limits and cap deductibles, which can drive up costs. This is worth considering when leasing.
All of these extra requirements might make it hard to consider other add-ons. But if gap coverage is not included in your lease contract or car payment, you should consider purchasing it. This is because leased cars begin to depreciate the second you drive away from the dealership, and the value of the car is often less than the price you paid at the dealership.
If you took out an auto loan instead of making a down payment and still have a lot of time left on your lease contract, you could owe more in lease payments than your insurance company will provide. Gap insurance is intended to pay for the difference. Also, if your vehicle is considered a total loss after an accident, your insurance provider will only pay your car’s actual cash value.
The Best Car Insurance Quotes for Leased Vehicles
Even though car insurance can cost more for leased vehicles, there are still some significant benefits if you decide to lease. For one thing, people enjoy the fun and look of driving a car that feels brand new while paying lower monthly costs. Fear of a high premium shouldn’t deter you from enjoying the benefits of financing a car.
Insurify can make finding an insurance policy for a leased car as easy as can be. Since most leasing companies and state laws require collision and comprehensive coverage for leased cars, you’ll want to compare insurance premiums for these coverage types. Insurify can help with side-by-side comparisons to make sure you’re getting excellent coverage at the best rates.
Frequently Asked Questions
While there are many benefits to deciding to lease a car, saving on insurance costs isn’t one of them. Unfortunately, insuring a leased car is a bit pricier than insuring an owned car because leasing companies require comprehensive coverage and collision coverage as minimum requirements, in addition to other add-ons that hike up the cost of your premiums.
Luckily, anyone can save big on their car insurance policy, even if it’s for a leased car. The best and easiest way to do this is to shop around. Always do your research and look up multiple quotes from multiple companies. The same person can get different rates at different companies because each company determines a unique risk profile for each individual.
It’s easy to compare cheap car insurance quotes with Insurify! In just minutes, our tools help you look up rates from hundreds of companies to make sure you get the best price for the best coverage. Insurify’s database is made up of over four million car insurance quotes. You’ll never miss out on affordable rates and great deals from reliable companies when you use Insurify.
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Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Service's database of auto insurance rates. With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums.