What Insurance Do You Need for a Leased Car?

You’ll generally need to have a full-coverage insurance policy and possibly gap coverage if you lease your vehicle, depending on your lease agreement.


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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.

Key Takeaways:

  • 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.

What Car Insurance Is Required When Leasing a Car?

woman driving a leased car

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.

Legal requirements

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.

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.

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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.

Do you need gap insurance for a leased car?

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.

How to Buy Leased Car Insurance

signing a car leasing agreement

Buying leased car insurance isn’t a difficult process, but there are some things you can do to save time and money:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. Add your leasing company: You’ll need your leasing company’s name and contact details to add them as “additional insureds” on your policy.

The Best Leased Car Insurance Companies

Woman driving a new leased vehicle

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.


Average premium: $168 per month

Compare.com rating: 4.05 out of 5


  • Many discount options
  • Premium insurance packages
  • Best-in-class customer service


  • Few in-person offices
  • No telematics discount
  • Sparse rideshare coverage availability

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.


Average premium: $215 per month

Compare.com rating: 3.8 out of 5


  • 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

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.

Liberty Mutual

Average premium: $164 per month

Compare.com rating: 3.95 out of 5


  • Plenty of discounts
  • Special perks for teachers
  • Shrinking deductible option


  • Relatively low AM Best rating
  • Less-than-stellar customer service
  • Limited rideshare coverage

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.

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Does Leased Car Insurance Cost More?

Woman standing next to a new leased vehicle

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:

How to get cheaper car insurance for a leased car

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.

Leased Car Insurance FAQs

Looking for more information about leased car insurance? Here are answers to some common questions.

What should you do with auto insurance after your lease ends?

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.

What happens if you get into an accident in a leased car?

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.

Is car insurance included in a lease?

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.

Is it better to lease or finance a car?

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.


Data scientists at Compare.com analyzed more than 50 million real-time auto insurance rates from more than 75 partner insurance providers to compile the quotes 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 quotes listed in this article have been gathered 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 drivers with insight into how auto insurance companies determine their premiums.


  1. Consumer Financial Protection Bureau, “What should I know about leasing versus buying a car?,” Accessed February 27, 2024.
  2. Insurance Information Institute, “Insuring a leased car,” Accessed February 27, 2024.
  3. Oregon Driver & Motor Vehicle Services, “Insurance Requirements,” Accessed February 27, 2024.
  4. American Bar Association, “HANDBOOK ON ADDITIONAL INSUREDS,” Accessed February 27, 2024.
  5. Insurance Information Institute, “What information do I need to give to my agent or company?,” Accessed February 27, 2024.
  6. J.D. Power, “Auto Insurance Customer Satisfaction Plummets as Rates Continue to Surge, J.D. Power Finds,” Accessed February 27, 2024.
  7. Nolo, “I Got Into a Car Accident in a Leased Vehicle, Accessed February 27, 2024.

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