Leasing your car can look attractive if you want to trade your car every few years, or if you have a low monthly cost. But what about leased car insurance? Who pays insurance on a rental car? Does the lease of a car include insurance costs? While every leasing company may have its own leasing auto insurance requirements, you will generally need to purchase robust coverage that protects the company’s investment in the vehicle. We have been carefully looking at car insurance for leased vehicles to make the best decision for your car and your wallet.
How car insurance works for rental cars
The process of guaranteeing a leased vehicle is similar to guaranteeing a funded vehicle. The main difference between leased vehicle warranty and owned vehicle warranty is that you may need to purchase additional coverage depending on the regulations outlined by the company that owns the vehicle. Leasing a vehicle does not usually have a direct impact on the premium, but some providers may consider it when setting a rate. However, in this case, the premium impact is usually minimal.
Lease insurance requirements vary depending on what is specified in the lease agreement. However, there are some standard coverage options that lessees can expect to pay when guaranteeing a leased vehicle. Most lenders may need full coverage auto insurance, including physical damage coverage to pay for repair or replacement of the vehicle. This is because the minimum coverage required by the state does not provide a range of physical damage.
Leasing car insurance requirements
Because leasing companies own a car, if your car insurance is stolen or gets involved in an accident, you need to be financially protected from damage to the vehicle. Leasing companies typically require collision compensation and comprehensive compensation. Collision coverage helps you pay for repairs caused by an accident, but comprehensive coverage provides coverage for repairs required in the event that your vehicle is damaged due to theft, vandalism, fallen objects, or other non-fault-related events.
Vehicle liability insurance is necessary to cover at least $100,000 per person for physical injuries caused to others, up to $300,000 per accident, and at least $50,000 in property damage. A leased policyholder can also consider purchasing gap insurance that will pay the difference between the value of the new leased vehicle in the event of theft or accident and the amount you are still owed. Another consideration is car rental refund coverage. This will pay some or all of the rental car while it is being repaired after a covered loss.
In contrast, if you have a car that you own entirely, you need to just buy the minimum required car insurance for your residential state. Almost every state has a minimum requirement, and in many places they are pretty low. For example, if you live in Pennsylvania, you will need to carry $15,000 per person and $30,000 per accident, with physical disability liability. This is much lower than what you need to buy on a leased vehicle.
It is important to carefully review the lease terms as some companies include gap insurance or other optional coverage types as part of their payments. If this coverage is not included, the borrower may consider going to a carrier that offers gap insurance coverage through car insurance.
What are the state requirements for insurance for leased cars?
When leasing a car, most lessors, regardless of the state, must purchase car insurance beyond the state’s minimum coverage requirements to include comprehensive and collision coverage. The cost of this more robust coverage depends on many factors. The postal code is one of them. For example, drivers in Florida pay an average of $3,430 per year for full coverage, while drivers in Idaho only pay an average of $1,301.
Insurance costs for leased vehicles
Insurance can be more expensive than owning a car, as you often need to buy a higher level of coverage for your rental vehicle. However, these higher requirements are written to the terms of the lease. Also, if you do not follow them, the lender may purchase compensation on your behalf. This coverage can be more expensive than car insurance you purchased yourself.
“Although leases on a car can be more affordable, as monthly lease payments are usually lower than car loan payments, there are a few differences that drivers should recognize.” “Lease agreements usually require $100,000 per person for liability restrictions for physical injury and property damages and $300,000 per person. You may need to have the comprehensive and high collision deduction chances, and the required gap coverage and annual mileage limits.
The make and model of the leased vehicle can also affect the cost of car insurance. It may make sense to get a car insurance quote first before committing to a lease. In this way, you can compare different makers and models to determine what fits both your lease and insurance payment budget. Sample rates for the full cover of some popular vehicles are as follows:
| Model | average. Fully covered car insurance costs |
|---|---|
| BMW 330i | $3,302 |
| Chevrolet Corvette | $3,554 |
| Ford F-150 | $2,611 |
| Honda CRV | $2,262 |
| Subaru Outback | $2,227 |
Lessers must scrutinize the terms of the contract before leasing the vehicle. If the additional insurance costs significantly increase your vehicle’s monthly payments, perceived savings are not necessarily worth it.
However, buying a vehicle requires a long-term commitment. This may be undesirable for drivers who prefer to switch vehicles more frequently and take advantage of newer models. We recommend that you carefully consider all options and carefully consider the best option for your particular situation.
How can I reduce my lease insurance costs?
There are several strategies that could help you reduce your insurance costs.
- When you buy the best insurance policy, you can pay to compare car insurance quotes from multiple insurance companies. All insurance companies use their own methodology to determine their rates, so they may receive a variety of options that will allow you to choose the most affordable price.
- Consider increasing the deductible. This will likely earn you a lower fee, but only do so if you can manage your high out-of-pocket amount in the event of a bill.
- Beware of discount opportunities. Almost every insurance company offers at least some discounts, some of which are easy to make. For example, if you agree to receive policy documents online rather than by mail, or if you agree to pay premiums in a direct deposit, you may save them.
-
Improved your credit rating can benefit you in the long term. Insurance companies often reward people with good credit at their preferred rates, so they can save policies over time by paying bills on time and keeping credit usage low.
FAQ
Methodology
Using Quadrant Information Services, Bankrate analyzes May 2025 rates for all ZIP codes and carriers in all 50 states, with Washington DC rates being weighted based on population density in each geographical region. The cited fees are based on 40-year-old male and female drivers with clean driving records, good credits and the following full coverage limits:
- $100,000 per person physical injury liability
- $300,000 for each accident
- Liability for property damages of $50,000 per accident
- Uninsured driver physical injury for $100,000 per person
- Uninsured driver’s physical injury for $300,000 per accident
- $500 collision deduction possible
- Comprehensive $500 deduction
To determine the minimum coverage limit, bank rates used minimum coverage to meet the requirements of each state. Our base profile driver owns a 2023 Toyota Camry, commutes five days a week and drives 12,000 miles a year. Bundles and paperless billing discounts apply.
These are sample rates and should be used for comparison purposes only. Your quote is different.
If specified, the base profile has been modified with the following driver characteristics:
