Car Leasing With Insurance: How much does it cost?

Imagine you’re new to a city and before you buy into the property market you decide to rent first to see how you like it. A car lease agreement works the same and is considered a long-term rental. As the lessor, you would need to pay a deposit or down payment up front, pay monthly installments, and then decide at the end of the term whether you want to keep the car or give it back. Keeping it would require you to make a further lump sum payment. 

What you may not know is that you’re also responsible for insurance for this car. Dealerships and leasing agents have very specific requirements, and you’ll also have to consider state laws and military car insurance laws if you’re on a base. Read on to learn how much a car lease with insurance will cost.

Do you need insurance when leasing a car? 

Insurance is a requirement when you’re leasing a car and you’re responsible for buying it. The type of insurance can differ across states, and leasing companies might also have different requirements. You may also find that certain models have higher insurance premiums due to the inherent risk, such as luxury sports cars or cars that have a high theft risk.

Car Insurance Requirements With a Lease

When you lease a car, there are four basic lease insurance requirements you’ll need to meet. These coverage types are typical requirements of leasing companies to ensure their asset is protected against collisions, losses, theft, and other events. These coverage options are listed below:

• Collision insurance. This insurance covers events where you need repairs done to your car should you collide with another vehicle or even a stationary object such as a rail or road hazard. You have coverage even if you’re the at-fault driver. 
• Comprehensive coverage. What about all the other events that could create an insurable event for you? Comprehensive insurance covers events such as fire, vandalism, theft, and weather conditions.
• Auto liability insurance. When a driving incident causes injury to someone or damage to a building, your liability insurance will help you cover the costs. Liability coverage is required in nearly every state and for all drivers. However, required amounts differ from state to state. 
• GAP insurance. GAP coverage isn’t required by all leasing companies or in all states. However, it can be beneficial to have. It covers the difference between the amount left on your loan and the actual value of the car.

It’s important to match your insurance with your needs, as well as what the leasing company requires.

Read more: How Much Is GAP Insurance?

Do leased cars come with insurance? 

While insurance isn’t automatically included in your car lease installment, it is a standard requirement. You will need to compare your insurance options to find coverage that meets your needs and satisfies the requirements of your leasing company. 

Does it cost more to insure a leased car? 

Product for product, insurance for leased cars doesn’t cost more. However, your total rates might be higher because the leasing company requires additional insurance types or higher coverage than the state minimums. For instance, it’s common for leasing companies to request collision and comprehensive coverage.

Other factors that will affect the cost of your insurance include: 

• Your age
• The type of car and its age 
• Your driving record and experience 
• Where you live 
• Your credit score

Ways to lower your insurance rates include shopping around for the best deal, asking for group discounts, and improving your credit score. Some insurance companies also take into consideration extra security measures such as tracking devices and secure parking, especially if your location is pushing up the insurance premium.

How are auto claims handled for leased cars?

Auto claims for leased cars work the same as for a purchased car, with one key difference — some car dealerships or leasing companies require drivers to notify them about the incident. The driver is still responsible for handling the claim and communicating with the insurance company.

As the insurance company proceeds with the claim, it’s important to keep the leasing company informed. It may have its own requirements in terms of the repair process and approved mechanics. 

Note that even if your car is totaled, it’s still important to pay the agreed amount to the leasing company. GAP coverage ensures that even if the value of the car was less than the insured amount, you’ll be able to settle with your leasing company. This is important for financial stability as the hunt for your next car begins.

Understanding Car Leasing With Insurance

It’s easy to get lost in all the paperwork when leasing a new car. To simplify the journey, it’s important to know the insurance requirements for leased cars. This allows you to be prepared and know the types of coverage and how much you’ll need.