Is Insurance Included in a Leased Car?

Most car lease agreements do not come with insurance. Few leasing companies offer gap insurance, but obtaining this type of insurance through a third party can actually decrease your monthly payments. Declining gap insurance will reduce your financed amount and help you pay less interest over the lease's life. 

It’s always a good idea to ask about insurance requirements before you begin leasing so you can shop around for coverage. Contacting the dealership or leasing company beforehand will also help you identify the specific coverage types and limits you need. Insurance coverage is one of the documents you need to lease a car. Many dealerships will not let you drive off the lot if you don’t have insurance coverage. 

FINN makes it easy to insure your car subscription hassle-free. FINN provides damage insurance for a predetermined amount incorporated into your monthly fee. This amount is standard nationwide, so you don’t have to sweat over factors that would otherwise drive up your monthly insurance premiums. 

Gap insurance bridges the monetary gap between how much you owe on a vehicle and how much it’s valued for when lost or totaled. If you were to lease a car and it gets stolen or totaled, gap insurance kicks in to cover any balance the insurance doesn’t when it pays out. If you didn’t have gap insurance, you’d be out of a driveable car and the money you still owe on the lease. 

Negotiating a car leasing deal without involving gap insurance is often best. While obtaining coverage through the leasing company or dealership is convenient, the insurance cost often gets added to your lease capitalized costs. This arrangement can increase your monthly payments and cause you to pay more interest over the lease. 

Increased interest is one of many car lease fees to avoid, so consider obtaining gap insurance through your primary car insurance carrier instead. While your leasing company may not require it in the agreement, it’s a safety net often worth paying for. 

One of the easiest car leasing mistakes to avoid is waiting to get car insurance coverage until the day you sign your new lease. You can easily request specific insurance requirements and limits ahead of time to shop around and find the best coverage at an affordable price. Leasing companies require proof of insurance before they give you the keys. 

Some leasing companies require you to pay for Original Equipment Manufacturer (OEM) parts instead of more affordable aftermarket parts if the leased vehicle needs repair. You must also list the leasing company as the “additional insured” party and “loss payee,” so they receive reimbursement if the insurance company pays out. More expensive cars may also require higher limits, increasing your monthly premium. 

Types of car insurance 

Insurance on a leased car looks slightly different than coverage for a financed car or one you own outright. Leasing companies will require some or all of the following types of car insurance with varying coverage limits: 

• Liability coverage, including bodily injury and property damage
• Personal injury protection (PIP) coverage
• Full coverage, including comprehensive and collision 
• Underinsured and uninsured motorist coverage 

While more insurance coverage can save you hundreds if not thousands of dollars in the event of an accident, such extensive coverage can cost you more monthly. Then again, it’s better to have it and not need it than have to use it. 

How to lower your car insurance premium 

Many car insurance companies offer discounts based on your eligibility. Consider the following discount options when obtaining car insurance for a lease: 

• Maintain a clean driving record
• Bundle your car insurance with other types of insurance, including renters or homeowners 
• Insure multiple cars under one policy 
• Show proof of your student or military status
• Monitor your driving habits with a telematics device 

Leased cars require higher insurance coverage limits, but you can minimize the increase by taking advantage of several discounts. Adhering to insurance requirements set by the leasing company can save you thousands of dollars if your leased car was stolen or involved in an accident and totaled. 

What type of insurance do you need for a car lease?

Car lease insurance requirements vary among leasing companies and dealerships. However, many lease agreements stipulate the following coverage or something similar: 

• $100,000 in liability coverage for a single person’s medical bills
• Up to $300,000 in liability coverage per accident
• $50,000 in property damage coverage per accident

These requirements far exceed the majority of state minimum insurance requirements. You may also be required to obtain “full coverage,” which includes collision and comprehensive coverage. Choosing full coverage with a higher deductible can help lower your premium, but remember you’re liable for that deductible before your insurance coverage kicks in. 

Shopping around for car insurance can be a drag, especially if you just want to get in your lease and drive. FINN offers a hassle-free alternative with one monthly insurance payment and no comparison shopping necessary. You can even prequalify in minutes to see if you’re eligible to subscribe to one of FINN’s many vehicles, from trucks and SUVs to electric and luxury. 

Insuring a leased car is often more expensive based on the leasing company’s specific requirements. Insuring a leased or financed car to your state’s minimum requirements comes out to be about the same monthly premium. However, leasing companies require additional coverage beyond state minimum requirements. With more insurance coverage comes a higher monthly premium.

Here’s an example of the difference between Washington, D.C. state minimum requirements, Mercedes-Benz leasing requirements, and FINN’s car subscription requirements, based on averages for a 35-year-old driver with a clean driving record and good credit: 

Carrying state minimum required insurance coverage only costs about $100 monthly. However, you’d pay nearly $200 monthly for the insurance coverage necessary in a Mercedes-Benz lease agreement. When you subscribe to FINN, you pay a $160 monthly fee that doesn’t change regardless of your chosen vehicle or where you live. 

When you own a vehicle outright, you can moderate your insurance coverage to meet state minimum requirements and fit your budget. Leasing a car requires a potentially higher coverage limit than you would otherwise. Nonetheless, you can take advantage of car insurance discounts by driving multiple vehicles, bundling your insurance types, or maintaining a clean driving record.