Auto Insurance for Leased Cars: How Much Do You Need?

When you lease a car, your lessor will probably require you to maintain full coverage car insurance that includes liability insurance plus physical damage protection, or comprehensive and collision coverage. A full coverage policy costs around $165 a month on average, although your costs may vary depending on the car you drive, your personal driving history, where you live, and more.

How much auto insurance do you need for a leased car?

If you’re leasing a car, you’ll need a car insurance policy with liability coverage. Your lender may also require you to carry full coverage and optional coverages like gap insurance.

You need to meet state minimum car insurance requirements

In almost every state, you’ll need to have a car insurance policy that meets the minimum liability requirements in your state. Liability insurance always includes the following types of coverage:

• Bodily injury (BI) liability: In most states, the at-fault driver’s bodily injury liability covers any of the victim’s medical bills, lost wages, and other injury-related expenses stemming from an accident
• Property damage (PD) liability: Covers the costs of repairing vehicles and property damaged by the at-fault driver

Liability coverage costs drivers an average of $77 a month, but you may find that your policy costs significantly more (or less) depending on the coverage requirements in your state.

Some states have additional car insurance requirements, including:

• Personal injury protection (PIP): Covers expenses related to injuries that you or your passengers sustained in an accident. Policies that include PIP cost an average of $214 a month.
• Uninsured motorist coverage and/or underinsured motorist coverage (UM/UIM): Covers your expenses after getting into an accident with an uninsured or underinsured driver. Policies that include UM/UIM cost an average of $202 a month.
• Medical Payments coverage (MedPay): Covers the cost of ongoing medical expenses including hospitalization fees and funeral expenses for yourself and/or your passengers, regardless of fault. Policies that include MedPay cost an average of $199 a month.

Often, the minimum car insurance required in your state isn’t enough to cover damages after an accident. Leasing companies also often require you to carry 100/300/100 liability—meaning $100,000 of bodily injury liability coverage per person, $300,000 of bodily injury liability coverage per accident, and $100,000 of property damage liability coverage.

At Jerry, our insurance agents generally recommend that all drivers carry liability limits of at least 100/300/100 liability insurance, plus full coverage.

Your lessor will likely require full coverage

In addition to the minimum liability insurance required by your state, most car lease agreements will require you to purchase full coverage insurance to cover damage to your own vehicle after an accident. A policy that includes liability insurance plus full coverage costs an average of $165 a month.

Full coverage includes two types of physical damage protection: collision insurance and comprehensive insurance.

• Collision coverage pays for any damages to your vehicle that result from a collision, whether with another car or with a stationary object. This also includes hit-and-runs and rollovers.
• Comprehensive coverage pays for damages to your vehicle that result from something other than a collision, such as vandalism, a natural disaster, or theft.

This additional insurance is a good idea for most drivers, especially those with newer cars—so even if full coverage isn’t listed in your coverage requirements, consider adding it to your policy.

We want to help you find the best policy for your leased car, so our experts analyzed thousands of policies to determine the average monthly cost of full coverage with some of the nation’s top insurance providers. Here’s what they found:

You may need gap insurance for a leased car

In some instances, your leasing company will also require that you add gap insurance to your insurance policy.¹ If you total your car and owe more on the lease than it’s worth, gap insurance will help cover the difference between your loan amount and the actual cash value (ACV) of your vehicle.

You can typically purchase gap insurance from either your leasing company or your auto insurance provider. Jerry’s experts analyzed thousands of car insurance policies purchased by our users to determine what drivers pay on average for gap insurance:

• Your lessor will usually add the total cost of gap insurance to your lease amount. Purchasing gap through your financing company usually costs an average of $200–$400.
• If you purchase gap insurance through your insurer, the cost will be added to your annual policy amount. This usually costs around $20 a year.

Gap insurance usually costs more from a dealership than from an insurance company, so get quotes for gap insurance from at least one insurance company before accepting your lessor’s offer.

Is leased car insurance expensive?

Leased vehicles are more expensive to insure on average because lenders require additional types of insurance and protection for the lease term.²

However, the final cost of your auto insurance policy depends on a lot of factors. For instance, your lessor might require insurance with high coverage limits, making your insurance more expensive. That said, you may qualify for lower rates based on your age, where you live, or your eligibility for discounts.

How to find affordable car insurance coverage for a leased vehicle

With so many types of coverage to buy, it may feel impossible to find affordable auto insurance for a leased vehicle. Fortunately, there are a few things you can do to lower your rates:

• Shop around: Before you settle on a provider, be sure to get quotes from at least three insurance companies. This is easy with Jerry—we’ll gather personalized quotes from dozens of insurance companies to help you find the best rate.
• Raise your deductible: The higher your deductible, the cheaper your car insurance rates will be. However, leasing companies may set a maximum deductible, so be mindful of these requirements.
• Look for discounts: Most insurance providers offer discounts of one kind or another. The most common ones include good student discounts, safe driver discounts, telematics discounts, and discounts for home and auto insurance bundles. Contact your insurance agent to see if there are any discounts available to you.

Sources

1. https://www.fbfs.com/learning-center/do-i-need-gap-insurance ↩︎
2. https://www.experian.com/blogs/ask-experian/is-insurance-on-a-leased-car-more-expensive/ ↩︎

MEET OUR EXPERTS

Liz Jenson

Liz Jenson is an insurance writer who specializes in general automotive and insurance topics. Liz’s mission is to produce informative and useful content to help car owners make smart choices when buying cars and car insurance. Since joining Jerry in 2021, Liz has written nearly 4,000 long- and short-form articles on topics including state-specific insurance recommendations, common car insurance questions, and deep dives into vehicle model details. Before they came to Jerry, Liz was a full-time student at Indiana University, Bloomington working on a double major in English and French.

Amy Bobinger

Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars. Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.