How much does auto insurance cost on a leased car?

If you consider leasing a car, you should understand what that means for your insurance. Leasing companies typically have stricter car insurance requirements than state requirements. You will likely have to buy more types of coverage with higher coverage limits.

Keep reading below to understand what types of coverage you need and how much it may cost when car leasing with insurance.

What insurance do I need for a leased car?

When you lease a car, you will be required to have car insurance before you drive the vehicle off the dealership lot. While state car insurance requirements will apply to your car, leased car insurance requirements may be stricter. Each leasing company will have its requirements for insurance, and more expensive vehicles may require higher coverage limits.

Let’s first take a look at car insurance requirements by state:

Minimum Legal Auto Insurance Requirements by State

In addition to the above insurance requirements, leasing companies typically require higher liability limits and other insurance types that offer broader coverage. For example, lenders and leasing companies commonly require collision and comprehensive coverage. 

While liability coverage and many other state requirements are mainly used to pay for other people’s injuries and damage, collision and comprehensive coverage pays for damage to your vehicle, which helps protect the leasing company in an accident or other loss.

Finally, your leasing company may also require GAP insurance, which will pay what you owe on your lease if the car is totaled.

Regardless of which kind of insurance you must have, leasing companies also require that the driver list the company as a loss payee on the insurance policy, which means that the leasing company receives the insurance payouts after a claim is filed.

How much does car insurance for leased cars cost?

Is insurance more expensive for a leased car?

Yes, car insurance is typically more costly for a leased car than for a vehicle you own because leasing companies require that you carry more coverage.

Let’s look at the average rates for the types of insurance you will likely need for your leased car. Here are the average rates for liability, collision, comprehensive, and full coverage:

Average Annual Auto Insurance Rates by Coverage Type

In addition, you may expect to pay more for GAP insurance. For example, GAP insurance could cost between $400 and $700 when you purchase it from a dealership or between $20 and $40 per year when you add it to your car insurance policy.

Read more: Is auto insurance higher for a leased car?

How can I save money on car insurance?

Since the cost of your car lease, including insurance, can be a little overwhelming, let’s look at ways to lower your auto insurance rates.

One of the best ways to save on your car insurance is to take advantage of car insurance discounts. Many companies offer various discounts, and an insurance agent may be able to help you find a company that provides the best discounts for you.

Below is a list of the discounts available at some of the most popular insurance companies:

Auto Insurance Discounts Available by Company

While discounts may help you save some money, you should also do your best to drive safely. If you already drive safely, you may want to consider using an app that gives discounts for safe driving behaviors.

With that being said, saving money starts with getting quotes. For example, when shopping for car insurance, you should get quotes from multiple companies to find out which company can get you the best deal for your leased car.