Editor's note - You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.
Insurance for leased cars works differently than for cars that are owned. Learn what kind of coverage you might need and the best companies to provide it.
Anyone who drives a car needs insurance. In many states, insurance is legally required and even if you live somewhere that doesn’t require insurance, getting a policy can help protect you from major financial damage if something happens while you’re driving your car.

If you lease your car rather than own it, the dealer you lease from will likely make you get coverage as part of the lease agreement. Many dealers also have minimum insurance requirements. Understanding how car insurance works, what types of coverage are available, and which insurers are the best to work with are important to finding a good deal.

Compare Car Insurance Plans


What Types of Insurance Are There?

There are a variety of types of car insurance coverage available, each covering a different aspect of your car or your use of the vehicle.

Liability

Liability coverage is typically split into two parts; bodily injury liability and property damage liability. This type of coverage protects you in the event of an accident where you are found liable for injury to another driver or their passengers, or damage to someone’s property.

You can purchase different levels of liability coverage. Higher levels of coverage will cost more but have higher payout limits.

Collision

If you get into an accident or run your car into a stationary object, your car will probably need some repairs before it’s safe to drive again. Collision coverage pays for the cost of the repairs that your car needs, up to a point (typically the value of the car).

One important variable in collision coverage is the deductible. This is the amount you have to pay after each collision before the insurance starts to cover your costs. Higher deductibles make the insurance cheaper but mean you’ll spend more out of pocket if you do have an accident.

Uninsured and Underinsured Motorist

Not everyone buys insurance, even in states where insurance is mandatory. Those who do buy insurance might not purchase enough to cover themselves if they’re at fault for an accident.

Consider a scenario where someone crashes into your car and injures you. The other driver is at fault and the court orders them to pay your medical bills but their insurance limits won’t cover the full cost of your bills. Uninsured and underinsured motorist coverage kicks in and covers the difference for you.

Comprehensive

Comprehensive car insurance protects you from damage to your car that comes from things other than driving it. It covers incidents like fire, flood, theft, vandalism, or extreme weather.

Comprehensive coverage typically covers the cost of repair or replacement up to your existing car’s value, which can make it valuable for newer, expensive cars.

Other coverage

There are many other types of car insurance or optional coverage that you can purchase. For example, some insurers offer specialized plans for people who want to use their car to drive for ridesharing programs or offer coverage that will pay for your rental car while your car is in the garage for repairs after an accident.

Are Any Types of Insurance Mandatory?

When you lease a car, there’s a good chance that you’ll have to get certain types and levels of insurance coverage, whether you want to or not.

State Regulations

Many states impose mandatory insurance requirements on drivers. These requirements help protect everyone on the road by making sure that those liable for accidents can pay for the damage they cause, through their insurance.

For example, Alabama requires drivers to purchase at least the following coverage:

  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident

New Hampshire doesn’t mandate drivers purchase any insurance, but for those who do, the minimums are:

  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $25,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
  • $25,000 uninsured/underinsured motorist property damage coverage
  • $1,000 medical payments coverage

Dealer Requirements

When you lease a car from a dealer, you don’t own the vehicle, the dealer does. There’s a good chance that your dealer will make you purchase insurance to protect the car while you drive it.

Frequently, dealers will want you to buy both collision and comprehensive coverage on a car that you lease. Collision coverage reimburses the dealer for the cost of the car if it is damaged in an accident while comprehensive coverage offers protection for other events, such as weather or theft, that damage it.

Typically, dealers will make you buy insurance that offers coverage up to the full value of the car.

Is Insuring a Leased Car More Expensive?

On a dollar for dollar basis, buying insurance for a leased car is not more expensive than insuring an owned car. However, many dealers will make you buy more coverage than you’d typically purchase for a car that you own. This increases the total cost of the insurance.

If you already planned to buy the same coverage that your dealer requires for leased vehicles, the price won’t change, but most people will ultimately have to pay for more coverage than they’d otherwise buy.

Before we get to the individual rankings, you might want to forego checking with each individual insurer and use a service that can help you find the best price on insurance. Gabi is a free online broker that is licensed in all 50 states and can help connect you with a lower-cost provider while still keeping the same level of auto insurance you need.

Visit Gabi or Read the full Gabi Insurance Review

Best Insurance for Leased Cars

There are many insurance companies that offer car insurance for both owned and leased vehicles.

Allstate

Allstate offers insurance for almost every need, including homes, condos, and leased cars. You can customize your car insurance coverage to meet your state’s and dealer’s requirements, and take advantage of multiple discounts to save money.

Some of Allstate’s car insurance discounts are:

  • Anti-theft device
  • Anti-lock brake
  • Multiple policy
  • Responsible payer
  • Early signing
  • Full payment
  • Safe driving club
  • Electronic statements

Amica

Amica offers customizable car insurance with multiple discounts and the option to choose a policy that pays you back.

Some of Amica’s discounts include:

  • Homeownership
  • Loyalty
  • Claim-free
  • Multi-policy
  • Full payment
  • Automatic payment
  • Electronic statements

Amica’s dividend car insurance policies generally cost more upfront, but can return 5% to 20% of your annual premium to you in the form of cash or a credit toward future coverage.

Geico

Geico offers a wide variety of insurance products, including home, renters, condo, and car insurance.

The company offers a huge variety of potential discounts, including:

  • Multi-policy
  • Car safety measures, including
    • Air bags
    • Anti-lock brakes
    • Anti-theft system
    • Daytime running lights
  • Defensive driving study
  • Good driver
  • Federal employee
  • Military
  • Multi-vehicle

Tip: Try shopping around for leased car insurance quotes with Policygenius

Final Thoughts

There are many insurance requirements that differ from the norm if you lease rather than own your car, so it’s important to carefully read and understand your unique policy. Make sure you fully understand what is required in your state, required from the car dealer, what kind of coverage you’re comfortable with, and how much you’re willing to pay. Don’t be afraid to get multiple quotes before you settle on one.

Author Bio

Total Articles: 9
TJ is a Boston-based freelance writer who specializes in credit, credit cards and bank accounts. In his spare time, he enjoys reading, writing, cooking, playing games (of the video and board varieties), soccer, and ultimate frisbee. You can find his work on his website, tjporterwriting.com.

Article comments