Do You Need Special Car Insurance For A Leased Car?
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Picture this: You lease the vehicle of your dreams, sign on the dotted line, and roll down the windows. Before you can even leave the lot, though, you're hit with a surprising number of unexpected insurance requirements and regulations. Insuring leased cars is a must for drivers, and it often comes with steeper costs than many drivers are accustomed to.
Car insurance for leased cars typically entails full coverage insurance, and many leasing companies require higher coverage levels and gap coverage as part of your lease agreement. This comprehensive guide to leased vehicle insurance will explain various car insurance coverage types, unique requirements for leasing a car, the reasons behind higher costs, and tips for finding affordable policies without sacrificing overall protection.
How Insurance for a Leased Car Works
If you have never leased a car before, you might be surprised to learn that auto insurance for leased cars is different than your average insurance policy for a vehicle that you own or finance. Car insurance for leased vehicles typically requires more extensive insurance coverage so that the leasing company can protect its investment.
You can check with your leasing company's requirements, but most will require full coverage insurance, including collision coverage, comprehensive coverage, and liability insurance. In addition, they might require higher liability limits than your state's minimum limits. Because the leasing company has a financial interest in your vehicle, it can set custom insurance requirements.
In addition, the leasing company will be listed as an insured and loss payee on your auto insurance policy, which means that they will receive payouts in the event of damage and a covered claim.
What Coverage Is Required When Leasing a Car
The typical insurance requirements when leasing a car include the following types of auto insurance:
- Liability coverage: Liability car insurance will cover damage or injuries that you cause to others while you are operating your car. Many leasing companies require higher liability coverage than your average state minimum levels, so it is important to verify your requirements.
- Collision coverage: Much like it sounds, collision coverage will cover damage to your vehicle from a crash or other incident, whether you were at fault or not. Again, your leasing agent may require additional coverage.
- Comprehensive coverage: Comprehensive insurance, then, will offer protection for your vehicle against non-collision-related damage, such as theft, vandalism, fire, and natural disasters.
- Gap insurance: This special type of add-on car insurance can cover extra costs when your standard car insurance is maxed out, helping the leasing company recover more costs in the wake of an accident.
When it comes to collision coverage vs. comprehensive coverage, it is important to note that both center around damage to your vehicle, whereas liability insurance covers injuries to other people. You may also want to consider personal injury protection, as well as bodily injury and uninsured motorist coverage/underinsured motorist coverage.
If you have questions about your requirements and limits, check with your leasing company before you purchase auto insurance.
Why Leased Car Insurance Costs More and How To Save
With higher liability limits and the requirement of full coverage car insurance, leased car insurance does cost more than standard car insurance. However, you can save money with the following helpful hints:
- Shop multiple insurance companies and compare quotes: It always pays to do your research. Shop around and get at least three insurance quotes so you know that you are getting the best deal.
- Bundle home and auto insurance: When you bundle multiple policies with the same insurance company, you can also rack up notable savings. This can include home and auto, renters' insurance and car insurance, and more.
- Take advantage of military, safe driver, and telematics discounts: Many insurance companies offer discounts for military veterans, safe driving, and other more that can add up. Telematics discounts use technology to track your driving habits. This type of usage-based insurance can also offer discounts for good driving habits.
- Keep your deductible under the required cap: Many leasing companies require a maximum deductible of $500 to $1,000. Lowering this limit can also affect your premium.
And it never hurts to ask your potential car insurance companies about discounts and ways to save on insurance.
Get Customized Car Insurance Comparisons Today
When you get a customized car insurance comparison from EverQuote, you can review your auto insurance options for leased vehicles side by side to make sure you are getting the best value for your current and future driving needs. If you plan on leasing for the long run, a custom quote can make a big difference in your overall auto insurance premium costs.
Getting a custom comparison is always free with EverQuote, and it only takes a few minutes to do. Interestingly, car insurance prices can change as often as every day, so the best way to get the right insurance for the right price is to compare and shop often.
Check out EverQuote today to get a customized car insurance comparison and get started with real savings.
FAQs about Insuring Leased Cars
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Premiums are sourced from over 30,000 zip codes across 200 insurance companies. We estimate premiums based on public filings for policies seeking 50/100 in liability with $500 deductibles for collision and comprehensive coverage. Estimated rates are based on a 35-year-old single female with a good credit score and no history of accidents or violations driving a 2023 Toyota RAV4 LE. We partner with Quadrant Information Services to source our data and assume no unique benefits or discounts are applied for these rates (unless otherwise stated). Your own rates may be different.