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Professor of Risk Management
25+ years in insurance
Former commercial lines underwriter
Updated
Full coverage includes collision insurance for damage after an accident and comprehensive insurance to protect against other types of losses, like theft.
Your lease might also require you to have gap insurance, but because the lender sometimes rolls the cost into your payment, you might not need to add it to your insurance policy.
Lease car insurance is standard auto insurance, but you must meet your leasing company’s coverage requirements to stay in compliance with your lease agreement.
Lease car insurance is a type of auto insurance policy lenders require for leased vehicles. It’s a standard car insurance policy, but you may have to meet coverage and policy limit requirements for your lease contract.
Lease car insurance protects the driver and the leasing company’s financial stake in the vehicle after an accident or non-collision event. Lenders usually require a policy with liability, comprehensive, and collision insurance, but you may also need gap insurance.
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The coverage you need for a leased car depends on the state you live in and the leasing company’s insurance requirements, but you typically need full coverage.
Liability insurance includes bodily injury liability and property damage liability coverage to pay for damages or injuries you cause in an accident to other vehicles, property, or people. Every state except New Hampshire requires drivers to have liability insurance at state-mandated minimum limits, but your leasing company will likely require higher limits.[1]
Collision insurance protects your vehicle after an accident. Leasing companies require this coverage to help pay for repairs if you damage the vehicle in a crash.
Comprehensive insurance covers damage from non-collision events. Leased cars usually require it, because it helps pay to repair or replace the vehicle due to theft, vandalism, fire, or bad weather. Comprehensive coverage is part of full coverage, along with collision coverage.
Gap insurance covers the difference between what you owe on your leased vehicle and its current market value if you total it or if someone steals it.[2] Leasing companies often require gap insurance because, without it, you might only be eligible for reimbursement of the actual cash value instead. But you may not need separate gap insurance if the lender includes the cost of coverage in your lease.
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Lease car insurance is standard auto insurance, just like coverage for vehicles you finance or own outright. But your lease contract usually requires:
Full coverage: You’ll need full-coverage insurance for leased vehicles and most financed cars, but not for a car you own.
Higher policy limits: Most lenders require drivers to buy a specific amount of coverage to protect the vehicle.
Gap insurance: Lenders require this coverage for leased vehicles, but it’s optional if you finance your vehicle or own it outright.
The cost of lease car insurance varies by insurance company and driver. Insurers look at factors like your age, ZIP code, driving history, credit, and vehicle value to determine your rates.[3] You’ll pay more than a liability-only policy since you generally need full coverage, and most leasing companies require higher-than-average policy limits.
The table below shows the average cost of full coverage versus a liability-only policy for the top car insurance companies.
Company | Average Monthly Premium: Liability | Average Monthly Premium: Full Coverage |
|---|---|---|
| Country Financial | $44 | $89 |
| Auto-Owners | $47 | $88 |
| NJM | $50 | $88 |
| USAA | $52 | $101 |
| State Farm | $54 | $103 |
| Erie | $68 | $121 |
| Mile Auto | $75 | $136 |
| Progressive | $78 | $131 |
| GEICO | $81 | $146 |
| American Family | $82 | $160 |
| Commonwealth Casualty | $84 | $177 |
| Safeco | $84 | $133 |
| The General | $86 | $206 |
| National General | $89 | $172 |
| Direct Auto | $92 | $164 |
| Allstate | $93 | $155 |
| Mercury | $96 | $169 |
| GAINSCO | $98 | $209 |
| Travelers | $98 | $190 |
| Dairyland | $100 | $246 |
| Elephant | $105 | $171 |
| Bristol West | $107 | $207 |
| AssuranceAmerica | $108 | $183 |
| Farmers | $108 | $208 |
| Root | $111 | $177 |
| Anchor | $115 | $239 |
| Clearcover | $119 | $208 |
| Plymouth Rock | $119 | $179 |
| Chubb | $120 | $223 |
| Liberty Mutual | $129 | $204 |
| Shelter | $134 | $239 |
| 21st Century | $135 | $255 |
| The Hartford | $136 | $240 |
| State Auto | $154 | $290 |
| CSAA | $162 | $238 |
| Amica | $237 | $417 |
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The cost of your lease car insurance depends on several key factors, including:
Lease requirements: The more coverage your leasing company requires in the lease contract, the more your policy may cost.
Vehicle type/value: Higher-value and newer vehicles are more expensive to insure, along with specific vehicle models.[4]
Coverage limits: It costs more to insure your leased car at higher coverage limits.
Deductible amount: A lower deductible means a higher rate, but choosing a higher deductible could bring premiums down slightly.
Driving record: Accidents and violations in your driving history will raise your premiums.
Credit history: In most states, insurers use credit-based insurance scores to determine rates.
Location: Drivers pay more for car insurance in locations with higher rates of accidents, severe weather, and crime.
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Follow these tips to get cheaper lease car insurance:
Compare quotes from multiple insurers. Shop around for lease insurance rates from a few different insurance companies to find the cheapest rates for the coverage you need.
Bundle policies. Combine your lease car insurance with homeowners, renters insurance, or other coverages to earn a multi-policy discount.
Adjust your deductible. Raising your deductible can lower your rate, but make sure you can afford the deductible if you have to file a claim.
Maintain a clean driving record. Safe driving habits can help you qualify for lower rates.
Build or maintain good credit. Good credit can lead to lower rates in most U.S. states.
Exhaust all discounts. Ask your agent or insurer about car insurance discounts that might help you save, including safe driver and good student discounts.
Some lease companies already include gap insurance in the cost of your lease. To avoid paying for duplicate coverage, review your lease contract closely or speak to the lender.
If you don’t purchase the coverage or policy limits your leasing company requires, you might be in violation of your lease contract. Underinsuring the vehicle may result in serious financial consequences, like penalties or vehicle repossession. You could also owe high out-of-pocket costs if you total your leased car and don’t have gap insurance.
Read the fine print carefully on your lease contract to be sure you understand the lender’s insurance requirements.
Find answers to common questions about lease car insurance below.
Most leasing companies require you to have full-coverage car insurance on a leased vehicle. And if, for some reason, your leasing company doesn’t require you to have full coverage, it’s usually still a good idea for added financial protection.
It depends. You can remove coverage at the end of a lease when you return the vehicle to the leasing company when your contract is up. If you decide to extend the lease or buy the vehicle outright, you’ll still need car insurance in most states, so you can’t remove coverage, but you can usually change coverage type and limits.
Most leasing companies require gap insurance, but they might include it as part of your lease payment. Before buying a separate policy for gap coverage, check your lease agreement closely to see what’s needed.
It depends. Because you’ll usually need full coverage for leased vehicles, you’ll pay more than for a liability-only policy. But your actual rate varies by insurer and risk factors like your age, where you live, and the type of vehicle you drive.
No. Lease car insurance, or any type of standard auto policy, doesn’t cover wear and tear. Auto insurance helps pay for repairs after an accident or covered event, like vandalism or bad weather.
Yes. You can shop around and compare quotes from different insurance companies for a leased car. Just make sure the policy meets your leasing company’s coverage and policy limit requirements
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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Professor of Risk Management
25+ years in insurance
Former commercial lines underwriter
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