What Insurance Do You Need for a Leased Car?

Leasing a car comes with specific insurance requirements that are often more stringent than those for financed vehicles. Understanding these requirements is crucial to ensure you have the right coverage and avoid any potential issues with your leasing company.

State Requirements

Auto insurance requirements vary by state. Nearly every state mandates liability coverage, and many have additional requirements. Here are some common coverages you may need depending on where you live:

• Liability: Covers injuries and property damage you cause to others. Leasing companies often require higher liability limits than state minimums.
• Uninsured/Underinsured Motorist: Covers injuries and damages if an uninsured or underinsured driver hits you.
• Personal Injury Protection (PIP)/Medical Payments (MedPay): Pays for accident-related injuries to you and your passengers, regardless of fault.

Leasing Company Requirements

Since the leasing company owns the vehicle, they usually require additional coverage to protect their financial interest:

• Collision: Covers accident-related damage to the leased vehicle when you’re at fault.
• Comprehensive: Covers theft and non-accident-related damage caused by fires, natural disasters, animals, and more.
• Guaranteed Asset Protection (GAP): Reimburses the leasing company for the difference between your remaining lease balance and the market value of your vehicle if it’s declared a total loss.

Are Insurance Requirements Different for a Purchased Car?

Whether you lease or buy, you must meet your state’s minimum coverage requirements. Lenders typically require comprehensive and collision coverage for financed vehicles but don’t usually mandate higher liability limits or GAP coverage.

How Much Does It Cost to Insure a Leased Car?

Insurance costs vary based on factors like the type of car, driving history, location, and more. Generally, insuring a leased car can be more expensive due to the higher coverage requirements set by leasing companies.

Is It More Expensive to Insure a Leased Car?

While leasing itself doesn’t directly increase insurance costs, the additional coverage and higher policy limits required by leasing companies typically result in higher premiums.

How to Get Car Insurance for a Leased Car

Follow these steps to get the right coverage for your leased vehicle:

1. Talk to the Leasing Company: Understand their coverage and policy limit requirements.
2. Decide on Coverage: Choose the types of coverage and policy limits you need.
3. Get Multiple Quotes: Use a comparison service to find the best deal.
4. Choose a Policy: Select the one that fits your needs and budget.
5. Include the Lessor: Add the leasing company as an additional insured and loss payee on your policy.
6. Provide Proof of Coverage: Show the lessor that you have adequate coverage when you sign the lease agreement.

The Bottom Line

Purchasing auto insurance for a leased vehicle isn’t much different from buying coverage for a financed car. Ensure you meet your state’s minimum insurance requirements and the leasing company’s conditions. For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with ease.