HomeCar InsuranceCheapest Auto Insurance for Leased Cars (2023 Guide)

Cheapest Auto Insurance for Leased Cars (2023 Guide)

Car Insurance Requirements for Leased Cars

When you lease a vehicle, you need to consider both state-mandated insurance requirements and the coverage your lessor requires. In most cases, leasing a car means you’ll need to purchase a full-coverage auto insurance policy. This type of policy covers liability coverage and other state minimums, along with comprehensive coverage and collision coverage.

Here are more details about these types of car insurance:

Liability Insurance Coverage

Nearly every state requires liability coverage for property damage and bodily injury. The amounts of coverage that are required vary by state, but the central idea is that liability car insurance covers expenses for the other driver and their passengers when you cause an accident.

There are two components to liability coverage:

  • Bodily injury liability: This covers other people’s medical expenses when you cause an accident. State minimums of $25,000 per person and $50,000 per accident are the most common.
  • Property damage liability: This covers damage to other people’s property when you’re at fault for an accident. For this type of coverage, a state minimum of $25,000 per accident is typical.

Other State Insurance Requirements

Certain states require drivers to carry uninsured/underinsured motorist coverage. This protection kicks in when you’re in an accident with someone who doesn’t have the required liability insurance or doesn’t have enough coverage to pay your expenses.

Some states require personal injury protection or medical payments coverage in addition to liability insurance. Florida doesn’t require bodily injury liability coverage, instead mandating PIP. PIP covers medical bills, funeral expenses and lost wages for the policyholder and their passengers, no matter who’s at fault for an accident. MedPay is similar but excludes lost wages.

Comprehensive and Collision Coverage

Leasing companies are likely to require full-coverage car insurance policies that include comprehensive and collision insurance. Here’s what each of these types of insurance entails:

  • Comprehensive insurance: This pays for vehicle damage caused by non-collision situations like vandalism, theft and natural disasters.
  • Collision coverage: This covers your repairs after your vehicle collides with another vehicle (no matter who’s at fault) or you hit a stationary object.

When you purchase whatever coverage your leasing company requires, you also need to name your lessor as a loss payee. This means your lessor will receive payment from the insurance company if the vehicle is totaled or stolen.

A table that shows what the six standard types of insurance do and don't cover and where they're required

Gap Coverage

Guaranteed asset protection, or gap insurance, is sometimes required when you lease a car. This type of insurance covers the difference between what your car is worth and how much you owe on it if the vehicle is totaled or stolen.

If your leased car is a total loss or gets stolen, your auto insurer will pay the actual cash value of the vehicle at the time of your claim (minus your deductible). The value of the car may not be enough to cover the remaining balance on the lease. That’s where gap coverage comes in, handling the rest of the debt.

How Much Does It Cost To Insure a Leased Car?

Insuring a leased car can be more expensive than insuring a car you own or are financing. When it comes to leased vehicles, some finance companies mandate having much higher liability limits than states usually require.

Leasing with GM Financial and Nissan Finance, for example, requires carrying comprehensive and collision coverage, along with higher limits of liability coverage.

  • GM: $100,000 per person and $300,000 per accident for bodily injury liability and $50,000 for property damage liability, or a combined single limit of $500,000
  • Nissan: $100,000 per person and $300,000 per accident for bodily injury liability and $50,000 for property damage liability

Some carmakers’ finance companies leave their liability coverage requirements at each state’s minimum. When you lease through Toyota Financial Services, for example, your full-coverage policy doesn’t need to have higher liability limits than your state requires.

Your leasing company may also require an insurance policy with a low deductible. That means you don’t have to pay much up front when you file a claim. While that’s easy on your wallet when you have a claim, it often means your premium will be higher.

In short, leasing a new car often comes with higher car insurance costs than financing a vehicle does. It all depends on the additional coverage and deductible requirements your lessor sets. It’s essential that you read your lease agreement carefully to know what types and amounts of car insurance are required.

Cheapest Auto Insurance for Leased Cars: Conclusion

Getting the cheapest leased car insurance is a matter of researching providers and comparing car insurance quotes from multiple companies. Make sure you fully understand your lease terms and insurance requirements before you begin shopping for the right coverage and insurer.

Top Auto Insurance Recommendations

As you compare car insurance options for your leased vehicle, we suggest you include State Farm and Geico. In our review of the top providers, we gave these two high ratings for their cost and industry reputations.

State Farm: Best for Most Drivers

State Farm is the largest auto insurer in the United States, and it’s our top choice thanks to its combination of quality coverage options and excellent customer service. The company offers all of the standard types of car insurance, along with extras like ride-share coverage and roadside assistance.

Drive Safe & Save™, State Farm’s usage-based program, can save good drivers up to 30% on their premiums when they renew their policies. The company also performs well in various J.D. Power studies, including a first-place ranking in the 2023 U.S. Insurance Shopping Study℠.

Read more: State Farm insurance review

Geico: Best for Budget-Conscious Drivers

Geico offers competitive rates and 16 car insurance discounts, earning it our title of Best for Budget-Conscious Drivers. The company is also known for strong customer service and holds sterling industry ratings for financial strength. Plus, Geico’s well-reviewed mobile app makes it easy to review policy details and file claims.

Geico offers plenty of ways to save on your car insurance premium. One is its DriveEasy program, which tracks driving habits to give safe drivers a discount. Policyholders can save between 15% and 25% with the company’s multi-vehicle, good student and good driver discounts.

Read more: Geico insurance review

Cheapest Auto Insurance for Leased Cars: FAQ

Below are frequently asked questions about the cheapest auto insurance for leased cars.

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