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Lindsay VanSomeren is an insurance and personal finance writer who’s been writing for Compare.com since 2023. Her work has also appeared in publications such as FICO, Credit Karma, The Balance, and more. She enjoys helping people learn how to manage their money better so they can live the lives they envision for themselves.
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Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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If you prefer to drive a new vehicle every few years and want to enjoy lower down payments without the hassle of car maintenance, leasing a car can be a great way to achieve the best of both worlds.
But sometimes, leasing a car can be more expensive than buying since leasing companies typically require more auto insurance coverage — like full-coverage and gap insurance — to protect their investment. The coverage requirements depend on your leasing agreement.
We’ll cover what you need to know about leased car insurance and how to find the best auto coverage for your leased vehicle.
You’ll need to purchase a full-coverage policy and possibly gap insurance if you lease your vehicle.
Leased car insurance is typically more expensive because of additional coverage requirements.
Check your lease agreement for specific auto insurance requirements.
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All drivers must have auto insurance to drive legally — including people with leased vehicles. If you lease your car, your state and leasing company dictate insurance requirements. In other words, you’ll need to purchase your state’s minimum requirements and meet any specific car insurance requirements from your leasing company.
We’ll start with typical state mandates for coverage.
The minimum car insurance requirements vary depending on where you live and are set by state law. Most states only require a certain amount of liability insurance, but some require additional coverages — we’ll explain the most common ones in more detail below.
Bodily injury liability: Pays for medical bills up to your policy limits if you injure someone in a car crash.
Property damage liability: Pays to repair or replace property that you damage in a car crash.
Personal injury protection (PIP): Pays medical bills, funeral expenses, and lost wages for you and your passengers — no matter who caused the accident.
Uninsured/underinsured motorist: Pays for your medical bills or property damage if an uninsured driver hits you or if the driver doesn’t have enough insurance to cover the full cost.
For example, Oregon drivers must purchase an auto insurance policy with at least $25,000 for bodily injury liability per person (up to $50,000 total per accident), $20,000 for property damage liability, $15,000 per person for PIP coverage, and $25,000 in uninsured motorist coverage (up to $50,000 per accident). Check with your local department of motor vehicles to better understand your state’s requirements.
Next, let’s look at common leasing company requirements.
When you lease your vehicle, the leasing company will tell you the type of insurance you need to buy. You’ll also need to add your leasing company as an “additional insured” when you buy your policy. This ensures that any claim payouts for your car will go to your leasing company since they own the vehicle.
The leasing company should go over this information with you when you sign your lease, but you can also find the details in your lease agreement.
Similar to a financed car, leasing companies require you to buy at least two types of additional coverages (also known as “full coverage” when you purchase both):
Collision: Covers your leased vehicle repairs or replacement if it’s damaged in an accident, such as hitting another vehicle or object.
Comprehensive: Covers your leased vehicle if it’s damaged from a non-collision accident, such as storm damage or theft.
Your leasing company may also require you to purchase gap coverage, but how this works depends on the leasing company. Let’s take a closer look.
Gap coverage pays for the difference between your leased vehicle’s actual cash value (ACV) and the remaining lease balance if it’s stolen or totaled in an accident.
For example, imagine you lease a vehicle for $45,000, but the remaining lease balance is $30,000. Your insurer determines the vehicle is worth $25,000 at the time of the accident. This means gap coverage will pay the $5,000 difference between the car’s value and the remaining balance. Without gap coverage, you’d have to cover the extra $5,000 out of pocket.
Some leasing companies purchase gap insurance to cover leased vehicles and roll the extra charge into your monthly lease payments. Others may require you to purchase a separate gap policy. Review your lease agreement to see how your leasing company handles it.
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Buying leased car insurance isn’t a difficult process, but there are some things you can do to save time and money:
Figure out what coverage you need: Check to see what your state and leasing company require, and consider if you want any additional coverage or amount of insurance beyond that.
Gather your details: Having a few details on hand can help speed up the process. Write down your car’s VIN, make, model, and year, and note any safety features or anti-theft devices.
Get quotes: Shop around and get quotes from at least three insurers. Pay particular attention to any relevant discounts that insurers may offer for your situation, such as for good students.
Purchase the best policy: Choose an insurer and buy your policy. It’s a good idea to sign up for automatic payments at this time so you don’t forget.
Add your leasing company: You’ll need your leasing company’s name and contact details to add them as “additional insureds” on your policy.
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Given that there isn’t a specific insurance policy for leased cars — and there’s no single best company for everyone — you choose from the same insurance companies as everyone else. That said, since you’ll need to purchase full-coverage car insurance and possibly gap coverage, some companies are an all around better option than others.
We found three companies best suited for drivers with leased cars because they offer affordable policies and gap insurance as well as great customer service and discounts, based on our research.
| User Reviews | 4.3 |
|---|---|
| Our Rating Compare.com's ratings are determined by our editorial team. The objective formula used in these reviews weighs several important factors to consider when choosing financial products and services, including customer satisfaction ratings, ease of use, and a number of other components. | 4.3 /5 |
| Liability Only Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages. | $296/mo |
| Full Coverage Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible. | $435/mo |
Drivers appreciate the excellent service but find the insurance to be costly, especially in certain states.
Drivers appreciate the excellent service but find the insurance to be costly, especially in certain states.
Amica has a fine reputation among customers, offering superior policy packages and top-notch customer service without a high price tag.
Although it doesn’t offer a discount for using a telematics app to record your driving, you may qualify for plenty of other car-specific discounts, especially considering most leased vehicles are new models and come with the latest features.
Many discount options
Premium insurance packages
Best-in-class customer service
Few in-person offices
No telematics discount
Sparse rideshare coverage availability
| User Reviews | 4.3 |
|---|---|
| Our Rating Compare.com's ratings are determined by our editorial team. The objective formula used in these reviews weighs several important factors to consider when choosing financial products and services, including customer satisfaction ratings, ease of use, and a number of other components. | 4.2 /5 |
| Liability Only Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages. | $82/mo |
| Full Coverage Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible. | $121/mo |
Drivers value the excellent coverage and quick claim responses but dislike the significant rate increases and lack of responsiveness to emails.
Drivers value the excellent coverage and quick claim responses but dislike the significant rate increases and lack of responsiveness to emails.
You’ll need to live in one of 12 states on the eastern side of the country to purchase an Erie policy, but if you do, count yourself lucky. Erie earns consistently high ratings in terms of customer satisfaction, claims processing, and its low volume of customer complaints.
Erie is an especially good option if you’re a family with teen drivers. It doesn’t offer many discounts, but of the ones it does, half are available to younger drivers.
Discounts for families
Top-notch customer satisfaction ratings
Bonus coverage options help save money
A bit more expensive
Fewer overall discounts
Limited availability by state
| User Reviews | 3.7 |
|---|---|
| Our Rating Compare.com's ratings are determined by our editorial team. The objective formula used in these reviews weighs several important factors to consider when choosing financial products and services, including customer satisfaction ratings, ease of use, and a number of other components. | 3.9 /5 |
| Liability Only Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages. | $163/mo |
| Full Coverage Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible. | $221/mo |
Customers appreciate the excellent customer service and efficient claim processing but are frustrated with the high and consistently increasing premiums. Some also found the website difficult to navigate.
Customers appreciate the excellent customer service and efficient claim processing but are frustrated with the high and consistently increasing premiums. Some also found the website difficult to navigate.
Liberty Mutual is the sixth-largest insurer in the U.S. It offers a variety of affordable auto policies — generally due to its many available discounts. In addition to standard bundling discounts, you may also qualify for lower rates if you’re a military member or a homeowner, for example. But as you might expect, the insurer has mixed customer service reviews.
Plenty of discounts
Special perks for teachers
Shrinking deductible option
Relatively low AM Best rating
Less-than-stellar customer service
Limited rideshare coverage
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Insurers don’t charge higher car insurance rates if you’re leasing your car as opposed to paying off a loan or owning it outright. But you’ll likely spend more on insurance because of the higher amount of coverage your leasing company requires.
For example, the average liability-only policy costs $131 per month. On the other hand, full-coverage policies that leasing companies require typically cost much more — an average of $271 per month, according to Compare.com data.
The specific rates you pay depend on many factors — and this can vary a lot by company. It’s even possible for one company to charge higher rates for a minimum liability insurance policy than another company does for a full-coverage policy. Plus, if you need gap coverage, the cost varies based on where you purchase it — highlighting why shopping around is important.
Here are some of the things that can affect your rates:
Aside from gathering as many quotes as you can before purchasing a policy, there are many things you can do to save money. Here are a few potential options:
Work on building or maintaining your credit score.
Choose a leased car with advanced safety and anti-theft features.
Go with the highest deductible you can afford and that your leasing company allows since insurers charge lower rates for higher deductibles.
See if any organizations, employers, credit unions, or other groups you belong to offer a company-specific discount.
Looking for more information about leased car insurance? Here are answers to some common questions.
It depends on what you’re doing with your car at the end of your lease. If you’re swapping your car for a new one, you’ll need to update your insurance. If you’re purchasing the car, you’ll need to remove the leasing company from your policy.
Check your lease contract. You’ll usually need to let your leasing and insurance companies know what happened, and an assigned claims adjuster will contact you to determine the extent of the damage. If the car is totaled, your gap insurance will kick in. Otherwise, you may need to coordinate repairs with your leasing company.
No — or at least not everything you need. In addition to state-mandated insurance requirements, collision, and comprehensive coverage, you’ll typically need gap coverage. Some leasing companies include this cost in your monthly payments, while others require you to buy it separately.
It depends. Leasing is generally a better option for people who prefer upgrading to new cars every few years at the expense of not owning the vehicle. Financing a car is better if you want to build equity in the vehicle and own it outright after you pay off the loan.
Sources
Consumer Financial Protection Bureau, “What should I know about leasing versus buying a car?,” Accessed February 27, 2024.
Insurance Information Institute, “Insuring a leased car,” Accessed February 27, 2024.
Oregon Driver & Motor Vehicle Services, “Insurance Requirements,” Accessed February 27, 2024.
American Bar Association, “HANDBOOK ON ADDITIONAL INSUREDS,” Accessed February 27, 2024.
Insurance Information Institute, “What information do I need to give to my agent or company?,” Accessed February 27, 2024.
J.D. Power, “Auto Insurance Customer Satisfaction Plummets as Rates Continue to Surge, J.D. Power Finds,” Accessed February 27, 2024.
Nolo, “I Got Into a Car Accident in a Leased Vehicle, Accessed February 27, 2024.
Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.
All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.
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Lindsay VanSomeren is an insurance and personal finance writer who’s been writing for Compare.com since 2023. Her work has also appeared in publications such as FICO, Credit Karma, The Balance, and more. She enjoys helping people learn how to manage their money better so they can live the lives they envision for themselves.
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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