Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Reviewed by Melanie Musson
Published Insurance Expert Melanie Musson

UPDATED: Mar 21, 2022

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Things to Remember

  • Leased cars do not come with insurance, so you’ll need to purchase coverage
  • Because leasing companies require higher limits on leased vehicles, insurance costs may be greater
  • Comparison shopping can help you find the best deal on car lease insurance

Leasing an automobile is equivalent to renting a car for an extended period. You’ll usually have to pay a down payment and monthly payments, which gives you access to a vehicle for several years. You’ll return the car after the lease has expired, and you will have to decide if you want to begin a new lease or purchase the vehicle. 

But, what about insurance for a leased car? Insurance for a leased vehicle is just as important as insurance for a car you purchase. We’ll go over more in-depth details about lease car insurance requirements below.

Do you need insurance when leasing a car?

Leasing a car may require you to have more car insurance coverage than buying one outright. Among other things, leasing companies may ask that you have GAP insurance. However, many people do not need this kind of insurance if they buy a car on their own.

Most states require that car insurance for leased cars include liability insurance. Plus, some leasing companies will also require you to carry comprehensive and collision coverages, commonly known as full coverage insurance. GAP insurance, while it is not required by the state, may also be required by the leasing company.

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Do leased cars come with insurance?

Your leasing agreement does not include liability, comprehensive, or collision car insurance coverage, so you will have to purchase adequate coverage to meet the requirements of both your state and your lessor. 

It is possible that your lease car insurance requirements with the dealership include GAP insurance. You can review your lease agreement to be sure. There are two options for GAP coverage:

  • You can purchase the coverage through your lease agreement.
  • You can get loan/lease GAP coverage from a standard insurer.

Does it cost more to insure a leased car?

The amount you pay for insurance on your leased automobile will depend on several factors, including the requirements of your leasing company, your state, and the car you’re leasing. Most leasing companies require larger coverage limits. Your lessor may also require you to carry a pre-determined deductible for comprehensive and collision coverage, which will affect your insurance rate.

Insuring a leased vehicle might be more expensive than insuring a purchased one. However, leasing a vehicle may result in lower monthly payments than financing, so the costs could balance out for you. 

Even if your lessor has stringent insurance coverage requirements, there are ways you can lower your auto insurance bill. Here are a few money-saving suggestions:

  • Comparison shopping. Comparison shopping will help determine which insurance company offers the most savings through discounts and programs.
  • Policy bundling. Many insurers will apply a discount if you combine your auto policy with your homeowners or renters insurance.

Ask an insurance representative if you are eligible for other car insurance discounts. Remember to comparison shop to find affordable car insurance for leased vehicles.

How are auto claims handled for leased cars?

The claims process for an automobile accident is essentially the same for both owned and leased vehicles. An insurance adjuster will inspect your vehicle for damage after you file a claim. Your insurance company may declare the leased car totaled depending on the amount of the damage.

If your car is totaled, the insurance company will pay the lessor the vehicle’s value. GAP coverage will pay the leasing company the difference between the value of the vehicle and how much you still owe if the car is totaled.

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Finding the Best Rates for Car Leasing Insurance

Car leasing with insurance can be costly because most leasing companies require you to obtain liability, comprehensive, collision, and GAP auto insurance coverage, also know as full coverage insurance. However, by doing some insurance comparison shopping, you may be able to lower your insurance prices down to a manageable level.