Key Takeaways
Leased cars are nothing but long-term rentals. People prefer rentals mainly because of budget constraints and a passion for frequently driving different models. Saving up to buy your own might be a long-term goal for many.
However, you can still be your boss with a leased car, which is why it is preferred. However, even if you are driving a leased car, it requires insurance that will save you from unprecedented out-of-pocket expenses.
In the case of leased cars, the monthly down payment might be lower, but the insurance premiums are different and higher than those of a car you own.
Here, we break down the specifics of the kind of insurance that a leased car demands.
It would help if you kept your car insurance up to date during the lease agreement because you have to return the rented car in the same condition you got it.
Here are some popular types of insurance coverage for a leased car:
If you only have liability insurance, you might be breaking your lease because it won't protect you physically if you're at fault in an accident. So, in addition to the above coverages, you may also need:
Apart from the coverage demanded by the state and the leasing companies in general, there are few other coverages specific to certain companies.
While a few will require a higher limit on liability coverage, others will demand a combination of coverage.
Leasing Company | Additional Insurance Requirements |
---|---|
Mercedes Benz | Full comprehensive and collision coverage
$2,500 maximum deductible for comprehensive and collision coverage Bodily Injury Liability: $100,000 per person; $300,000 per accident Property Damage Liability: $50,000 per accident |
Kia | Full comprehensive and collision coverage
$1,000 maximum deductible for comprehensive and collision coverage Bodily Injury Liability: $100,000 per person; $300,000 per accident Property Damage Liability: $50,000 per accident |
Honda | Full comprehensive and collision coverage |
GM | Full comprehensive and collision coverage
$1,000 maximum deductible for comprehensive and collision coverage |
It is the coverage requirements that make a leased car expensive. However, leasing may result in lower monthly payments than financing. The leasing company may also stipulate a particular comprehensive and collision coverage deductible, affecting your insurance premium.
The cost of leasing a car may not spike if your policy meets minimum state requirements. If you do not have the required coverage, the leasing company will buy you forced-place insurance. This can be higher than the standard insurance policy you choose according to your needs.
The major catch of leasing a car is that it doesn't require a long-term commitment like owning a car. Suppose you are fond of switching cars and driving around different models. In that case, leasing is viable, provided you scrutinize the terms and conditions before leasing the car.
Insurance Company | Average Monthly Quote |
---|---|
Amigo USA | $159 |
Kemper | $160 |
Progressive | $195 |
Nationwide | $212 |
Elephant | $219 |
Clearcover | $221 |
National General | $277 |
Mercury | $301 |
AssuranceAmerica | $324 |
Bristol West | $323 |
State | Average Monthly Quote for Leased Vehicles | State | Average Monthly Quote for Leased Vehicles |
---|---|---|---|
Alabama | $257 | Nebraska | $234 |
Arizona | $270 | Nevada | $369 |
Arkansas | $277 | New Hampshire | $150 |
California | $297 | New Jersey | $295 |
Colorado | $316 | New Mexico | $217 |
Connecticut | $319 | New York | $381 |
Delaware | $372 | North Carolina | $180 |
Florida | $348 | North Dakota | $186 |
Georgia | $401 | Ohio | $190 |
Hawaii | $149 | Oklahoma | $254 |
Idaho | $181 | Oregon | $255 |
Illinois | $207 | Pennsylvania | $241 |
Indiana | $187 | Rhode Island | $365 |
Iowa | $227 | South Carolina | $350 |
Kansas | $275 | South Dakota | $192 |
Kentucky | $363 | Tennessee | $233 |
Louisiana | $457 | Texas | $316 |
Maine | $158 | Utah | $224 |
Maryland | $357 | Vermont | $160 |
Massachusetts | $208 | Virginia | $251 |
Michigan | $538 | Washington | $276 |
Minnesota | $213 | Washington, D.C. | $302 |
Mississippi | $279 | West Virginia | $275 |
Missouri | $353 | Wisconsin | $223 |
Montana | $212 | Wyoming | $151 |
Gap insurance is a particular type of auto insurance coverage that car owners can purchase to protect themselves against losses that may occur due to compensation received from a total loss not fully covering the amount still owed on the vehicle's finance or lease agreement.
It is mainly useful for new vehicles that depreciate rapidly once driven off the lot, and leasing a used car typically does not make sense. The highest benefit you can receive from the gap insurance is limited.
Depending on your policy, this can range between $30,000 and $125,000. Thus, if you are leasing a new car, having gap insurance can be beneficial.
To put it simply, no. Even though your insurance rate depends on many things, whether you own or share your car doesn't affect it alone. But it might cost more because your lease deal says you must have full coverage insurance on your car.
This is especially true if you're used to only having the state-required minimum coverage.
It's easy to figure out what to do with your insurance after your lease:
Many things make you want to buy your leased car when the time is over.
Some of these are:
Buying your car from the lease will be easy, no matter your reason. Get a few prices to see how much the car is worth, and then wait until the end of your loan.
Buying the car before the lease ends may incur extra fees. Your leasing company will likely contact you 90 days before your deal ends to discuss what to do next. To get the best deal, ask about deals and savings.
When it comes to car insurance, all you need to do is look over your coverage (and maybe see if you need gap insurance) and remove your rental company from your policy. You must add a lienholder as an extra interest to your coverage if you plan to finance a car you used to lease.
Though high insurance premium rates for a leased car exist, there are hacks to save on insurance for your leased car.
The auto insurance rates published in this guide are based on the results of research completed by Way.com’s data team. Using a mix of public and internal data, we analyzed millions of rate averages across U.S. ZIP codes.
Quotes are typically based on a full coverage policy average unless otherwise noted within the content.
These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes will differ. Given this, it’s important to go through our insurance steps form to find how much you can save with way.com
Way.com’s Insurance Broker Quote Data
The major distinction between leasing a vehicle and financing one is that a leasing company owns the leased vehicle. In contrast, drivers of financed cars have purchased it using a loan that must be repaid. Leasing lets a driver have temporary possession of the vehicle without ownership.
The first answer that can be given in support of both is that it is a matter of preference. If you like to switch cars and try different and latest models of cars, then leasing is the better option. It gives you the freedom to switch conveniently. However, leasing might not be as costly as financing a car, but the coverage levied by the leasing companies can tighten your purse strings.
If you are leasing a new car, then opting for gap insurance can be beneficial in the case of accidents. Also, if your leasing company has included the cost of gap insurance coverage in lease payments, you might not need separate insurance coverage.
The insurance rates for a leased car are not fixed. It depends on a variety of factors like the model, the year of its make, driving history, other non-driving factors like your location, the crash rates of the place, the state-required insurance limits, and the other coverages demanded by the leasing company.
The expenses of a leased car depend on the insurance coverage and the model you have decided to lease. The expenses will be checked if you drive the car within limits. If you exceed the miles, you must pay an overage charge.
Access your digital insurance card through the app. You no longer need to carry your physical insurance card with you.
Receive reminders before your renewal. Way.com will also send new quotes from up to 45 insurance companies with your renewal reminder.
Keep everyone on your policy up to date by sharing your insurance information.
Make changes to your policy right from the app (coming soon) and ask for expert advice.