Insuring Leased Cars: Coverage and Requirements

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Key Takeaways

From fender benders to liability claims, car insurance for your leased vehicle helps ensure you have peace of mind knowing you, your passengers and your car are covered.
In addition to state requirements, lenders will typically require you to carry certain coverages and amounts to better safeguard your vehicle.
If you’re shopping for auto insurance for a leased car, The Hartford has over 200 years of experience protecting individuals on the road.

What You Need To Know About Lease Insurance

Whether your vehicle is leased, financed or owned, car insurance helps protect you, your car and your passengers on the road. Specifically, if you lease your vehicle, it’s important to know that you’ll typically have coverage requirements from your lender. Plus, on top of any leasing company requirements, states have their own minimum required amounts for certain coverages. Together, these coverages form the foundation of car insurance for leased cars and help make sure you’re protected against unexpected accidents or damages. If you’re wondering how much car insurance you need or have other questions about coverage, our specialists are here to help at 888-546-9099.

driver protected by insurance for leased car

What Is the Difference Between Leasing and Financing a Car?

The main difference between leasing and financing is simple:

Leasing a car means you sign an agreement to pay a monthly rate to drive the vehicle, essentially renting a car from the dealership. You can either return the car at the end of the lease period or decide to purchase it.
Financing a car means you are paying off your car through an auto loan. At any time during the loan, you can pay the car off in full, at which time you’ll receive the title or ownership record.

Leasing vs. Financing a Car

There are pros and cons to buying a car or leasing a vehicle. To help you decide, consider the benefits and drawbacks for each:

	Leasing a Car	Buying a Car
Benefits	Lower monthly payments No depreciation worries Ability to have a new car more frequently	Owning outright or gaining ownership over time No mileage limits Ability to sell anytime
Drawbacks	No equity Mileage restrictions Potential fees for wear and tear Lease termination fees	Fluctuating resale value Higher monthly payments Maintenance costs

What Type of Leased Vehicle Insurance Do You Need?

With The Hartford, you won’t have to worry about being underinsured. All AARP Auto Insurance policies from The Hartford come equipped with the coverage you need, depending where you live. States require bodily injury liability insurance and property damage liability insurance at certain coverage limits, regardless of vehicle ownership status. For leased vehicles specifically, most lenders will require more car insurance than the state minimums. These coverages typically include:

Collision coverage, which helps pay for damage done to your car if you hit another vehicle or object.
Comprehensive coverage, which helps protect your car from damages you can’t control, like fire, hail, wind, theft, vandalism or hitting an animal.
Gap insurance, which helps protect you if your car is stolen or totaled and you owe more money on the lease than what the car is currently worth.

Is It More Expensive To Insure a Leased Car?

Although state auto insurance requirements for liability coverages are the same whether you lease, finance or own your car, lenders may want you to have higher limits to better protect your leased vehicle. Not to mention, leasing companies usually require additional coverages that go beyond what your state requires. For these reasons, insuring leased cars can be more expensive, especially when you’re comparing car insurance for a lease to car insurance for an older vehicle that is owned outright.

Just because you’re leasing a new car doesn’t mean you can’t take advantage of savings. If your vehicle has certain safety features, like anti-lock brakes or anti-theft devices, you can get a car insurance discount with The Hartford.

Frequently Asked Questions About Car Leasing and Insurance

Do You Have To Have Full Coverage to Lease a Car?

Most lenders require you to have full coverage car insurance, which includes comprehensive and collision coverage, before you drive off the lot in your leased vehicle.

Is Insurance Included in a Leased Car?

No, you will need to purchase a car insurance policy separately. However, your leasing company may include gap coverage as an added cost to your monthly payments. The best way to find out is to ask your lender directly.

How Much More Is Insurance on Leased Cars?

Insurance for a new car you’re leasing may be more expensive than an older vehicle that is owned outright. This is because lenders have coverage requirements that aren’t needed if you own the vehicle. Plus, the leased car itself may be more expensive to repair or replace if it’s new. Ultimately, the amount you pay for insurance on a leased car will depend on a variety of factors, like your:

Location
Vehicle year, make and model
Coverage amounts

Do Leased Cars Need Gap Insurance?

Gap insurance coverage is an essential part of insuring your leased vehicle. It helps cover the difference between your car’s actual cash value and the amount you still owe on the loan if it’s stolen or declared a total loss. Most leasing companies will require you to purchase gap insurance as part of your auto insurance plan. So, if you’re currently shopping for car insurance for leased vehicles, make sure gap coverage is clearly outlined in your plan.