How does car insurance work with a leased vehicle?

FREE Car Insurance Comparison

 Secured with SHA-256 Encryption

Compare quotes from the top car insurance companies and save!

In a nutshell...
  • Leased vehicles usually require more insurance than financed or owned vehicles
  • Leasing companies mandate drivers to have comprehensive and collision coverages to protect their own interests
  • Gap insurance is also required on leased vehicles and is usually rolled into the cost of leasing the vehicle

A leased vehicle is quite arguably the type of vehicle that needs the most insurance coverage when compared to vehicles that are owned or financed.

If you need to find lower rates for your car insurance premium, try using an online price comparison tool.

These tools have helped many leasing drivers save time and money when it comes to auto insurance. Enter your zip code above to get FREE car insurance quotes today!

Required Insurance Coverage for Leased Vehicles

Leased vehicles need to be covered by several different types of auto insurance. This is because the leasing company, other drivers, and you need to be protected in the event of an accident.

The following types of insurance coverage should be in place on any leased vehicle:

Read on to learn more about what each type of insurance covers and why each is important to have on a leased vehicle.

Liability Coverage

Nearly every state requires all drivers to carry liability insurance, no matter if their vehicle is leased, owned, or financed.

Liability will pay for damages you cause to other people or their property. It does not provide for damages you incur in an accident.

For instance, if you hit another driver and caused $1,500 worth of damages to their vehicle and $1,000 in medical bills, liability coverage would pick up the tab if you were found to be at fault for the accident.

In this case, you would need med pay and collision to be fully covered.

With a leased vehicle, you would file a liability claim the same way you would if you owned or financed your vehicle.

Collision Coverage

In order to protect your own vehicle and financial interests, you need to have collision coverage on your vehicle.

In fact, most auto lease and loan companies require that leased or financed vehicles have collision coverage.

Collision coverage is necessary to cover any damages to your car if it collides with another car or object.

As with owned or financed cars, you will choose your deductible amount for this coverage. If you file a claim, you must also pay the deductible amount when the work is completed.

FREE Car Insurance Comparison

Compare quotes from the top car insurance companies and save!

 Secured with SHA-256 Encryption

Comprehensive Coverage

If your leased car is stolen, vandalized, or otherwise damaged outside of a collision, you will be relieved that you had comprehensive coverage.

This type of car insurance also provides payment for cars that are damaged due to fires, flooding, other natural disasters, or even hitting wildlife.

Just like collision coverage, comprehensive is usually mandated on leased and financed cars and requires a separate deductible.

Med Pay/PIP

This type of coverage is also known as medical payments or personal injury protection. In some states, it is a legal requirement for all drivers.

No matter who is at fault for an accident, this type of insurance pays for medical bills and other expenses related to your own bodily injury such as housekeeping.

Although not required by your leasing company, this coverage is important to have even if you have health insurance.

Uninsured/Underinsured Motorist Coverage

Underinsured motorist coverage is a legally mandated insurance coverage in some states.

If you are in an accident caused by an uninsured motorist, this coverage will pay for your damages.

Although not a legal requirement of drivers, underinsured motorist coverage is also a smart addition to your auto policy.

This coverage is for when another insured driver is at fault for your damages, yet the limits of their insurance coverage do not fully cover all of your damages for property or bodily injury.

Gap Insurance Coverage

Gap coverage is unique to leased cars and sometimes to financed ones too.

In the event that you are in an accident and your auto insurance carrier decides it makes more sense to pay you the fair market value for your vehicle, also known as totaling your vehicle, gap insurance is important.

Gap insurance fills in this gap for you and picks up the remaining balance so that you do not owe anything.

Drivers should check with their leasing company, however, in most cases, the cost of their gap insurance is rolled into the amount of their lease.

If this is the case and your car is totaled, you simply do not have to pay the leasing company for the gap amount.

What about Filing Claims on a Leased Vehicle?

In most cases, you will file a claim with your auto insurance carrier for a leased vehicle the same as you would for a vehicle you own or are financing.

The only common exception to this rule is if you need to utilize your gap insurance coverage. In this case, you contact both your auto insurance company and your leasing company.

If you are having trouble affording insurance for your leased vehicle, consider trying an online price comparison calculator for auto insurance.

Enter your zip code below for FREE car insurance quotes today!

FREE Car Insurance Comparison

Compare quotes from the top car insurance companies and save!

 Secured with SHA-256 Encryption

[0-9]
[0-9]