How much is car insurance for a leased car?

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Here's what you need to know...
  • Leasing companies require full coverage, comprising of comprehensive, collision and liability coverage
  • It is always wise to check with your lease company about any gap car insurance options
  • It is important to understand why it is necessary to have auto insurance for leased car and what the cost of insurance for a lease car is

The cost of car insurance for a leased car is higher than the cost of car insurance for a vehicle purchased through a traditional car loan. However, this increase has to do with higher coverage requirements than just the mere fact of leasing a car.

Whenever you lease a vehicle, the ownership will remain with the leasing company for the full term of the lease so its required you have comprehensive car insurance coverage to minimize any liability to the leasing company.

Drivers of leased vehicles often realize quickly that state minimum car insurance requirements are too low as auto leasing companies require you to have much more coverage sometimes 10 times as much.

Increasing your coverage is usually not that expensive, but you really should contact car insurance companies before leasing a car to understand how this coverage will affect your monthly auto insurance premiums.

Deciding to Purchase the Lease

Once the term of the lease expires, you often have a choice of purchasing the car from the lease company at a pre-defined value. You can then reassess your insurance needs.

There are many advantages to leasing a car even with the increased car insurance coverage requirements.

Here are two significant advantages:

  • Lease payments are often tax deductible vs. a car loan payment. Very important for people who are self-employed or work on 1099’s
  • Always under Warranty. People who lease cars sometimes get a new model every few years, so the maintenance cost is minimal as the vehicle in possession is never more than just a few years old.

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Is car insurance on a leased car more expensive?

Yes and no.  While car insurance companies do not charge simply because the vehicle is leased, car leasing companies do require more coverage than most standard auto insurance policies, so you will see a small increase in car insurance rates for leasing a car.

Leasing companies require full coverage, comprising of comprehensive, collision and liability coverage.

It is important to understand why it is necessary to have auto insurance for leased car and what the cost of insurance for a lease car is.

Comprehensive car insurance coverage provides liability protection should the car be damaged via natural disasters, Acts of God, vandalism, theft, and fire.

Collision car insurance coverage provides liability protection should the car be damaged or written off in a car accident or destroyed or damaged by some other object.

Liability insurance coverage provides liability protection for damage to persons/property with requirements usually being 100/300/100.

GAP Insurance for a Leased Car: Optional but Mandatory

There is one car insurance option that anyone leasing a car should always consider and that is gap insurance, this covers the difference between the actual book value of the vehicle and the amount of money still owing on the lease.

This is important to remember as without this you may find you owe the lease company thousands of dollars in the event of a car accident.

Remember the unfortunate truth is that cars quickly depreciate (mainly new cars) and just driving it from the showroom floor may lose 20% of its value or more.

Some lease companies often buy gap car insurance in group coverage and offer you the option to purchase it at the time of lease rolling the premiums into the regular lease payments per month.

It is always wise to check with your lease company about any gap car insurance options. Gap insurance is not expensive and may range anywhere from $7 to $20 per month, so it is well worth having.

What determines the cost of car insurance for a leased car?

Some determining factors alter the price of car insurance paid on lease cars and are not unlike those for car insurance on a regularly financed car.

Premiums are affected by some factors including your driving record, the cars safety and security features, how the vehicle is going to be used, the type of vehicle how much income to lease a car and more.

Calculation of car insurance premiums for a leased car is no different than those for vehicles you have financed or own outright. It’s just that more coverage is required.

Need a car insurance quote for a leased car? Use our universal zip code below search to find car insurance companies and start your car insurance comparison search online.

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