Car Insurance for Leased Vehicles
For drivers not ready to commit to purchasing a new car, leasing can be a helpful solution. In the short term, it can be a more affordable option, as it usually entails lower monthly payments and free maintenance. If you do go this route, you’ll still need to get insurance -- read on to learn about the nuances of insuring a leased vehicle.
Minimum Insurance Requirements
To start with, every active driver in possession of a car needs to have insurance, whether you lease or own. What types of coverage you need and how much will depend on where you live -- states have minimum coverage standards that drivers have to meet.
While we recommend everyone look into their own state’s guidelines, most state minimums require at least a certain amount of bodily injury and property damage liability; this is insurance that covers the costs if you damage someone else’s property or injure another person while driving.
Many drivers also purchase one or more of the following coverages, either because it is required by their state or because it is simply safer to be better insured:
- Comprehensive/collision: These cover damage incurred to your vehicle in the event of an accident. Collision covers collision-related damage, while comprehensive requires damage that falls outside of that umbrella.
- Personal injury protection/medical payments: Personal injury protection (PIP) and medical payments (MedPay) are both coverage types that cover medical costs associated with an accident. Some states require PIP, some require MedPay, and others require neither.
- Uninsured/underinsured motorist coverage: If you get in an accident with an uninsured or underinsured driver, this insurance will kick in to cover your costs.
Requirements for Leased Cars by Insurance Company
Your leasing company will require you to insure your car and will likely have specific coverage standards that your policy must meet. Collision and comprehensive coverage will almost certainly be required -- as you are only leasing your vehicle and will eventually return it to the dealer, they have an incentive to ensure that it is protected from damage.
Additionally, many dealers will by default require you to purchase a higher amount of liability insurance. You can almost guarantee that you will be paying for more than just state minimum insurance if you lease a car.
Should I Get Gap Insurance?
In some cases, your car dealer may also require you to purchase gap insurance -- if a car is totaled or stolen, this will pay the difference between how much you still owe for your car and how much it is currently worth. Cars depreciate in value over time, and leased vehicles are no exception. By having gap insurance, you’ll be more likely to pay the difference if your leased car is deemed a loss.
Does Insuring a Leased Car Cost More?
Insuring a leased vehicle can be more expensive if you would otherwise only buy state minimum insurance. If you are someone who always opts for full coverage, however, the difference will be negligible. If you are most concerned about the immediate costs of having a car, a lease might be a good option. Leases typically involve a lower monthly payment, though they also come with some rules, such as mileage maximums. The list of pros and cons regarding leasing goes beyond just the cost.
Whether you are driving a leased car or you own one outright, comparing insurance quotes is one simple way to make sure you aren’t overpaying on insurance. Compare car insurance rates with us today and start saving.