Is Insurance on a Leased Car More Expensive?

Leased cars, like any other car on the road, require insurance. Each state has its own minimum car insurance requirements, but leased cars often require additional coverage. Leasing companies typically stipulate their minimum car insurance requirements as part of the leasing process. 

Several factors can raise or lower your monthly car insurance premiums in addition to the coverage your leasing company requires. These factors include your driving record, age, location, and your driving experience. Vehicle factors such as age and type also play a part in determining your monthly car insurance premium. 

Leasing a car can affect the cost of car insurance, depending on what type of coverage you typically elect. A car leasing company typically requires a bit more coverage than the state requires as a minimum. This can result in a slight increase in your monthly premium. 

However, if you always opt for full coverage, your monthly premium may not change if you insure a leased car. Full coverage often covers the requirements set out by the state and any leasing companies. You may only need to adjust specific coverage limits, with negligible or no additional charges added to your monthly bill. 

Factors that affect car insurance cost

Unfortunately, a universal calculator for car insurance costs doesn’t exist. However, the following factors can positively or negatively influence your monthly car insurance premiums: 

• Where you live 
• Your driving record, including any prior accidents or tickets
• Your age and driving experience
• The type of vehicle you drive
• How many miles you drive annually 
• The age of your vehicle
• Your deductible
• What coverage limits you elect

These factors apply if you financed, leased, or purchased a vehicle outright. You can lease a car with bad credit, but the higher your credit score, the less you’ll pay for your lease and car insurance.    

You can save money on your monthly car insurance in several ways. Saving money on your car insurance each month can help you avoid situations where you can’t afford your car lease payments anymore.  

1. Drive safe daily 

Obey the traffic laws and keep your eyes and ears open. Don’t take any unnecessary risks by pulling out into traffic or speeding. Wait a few moments after the light turns green to avoid colliding with cars that run the red light. 

2. Maintain a clean credit report and driving record

Did you know your credit score can affect your car insurance premiums? If you can figure out how to increase your credit score to lease a car, you could also benefit from the increase via your car insurance premiums. 

In addition, you should also avoid accidents when possible. Drive responsibly and don’t speed. Refrain from driving recklessly and putting you and your passengers in danger. 

3. Bundle your insurance under one carrier

Many insurance companies offer discounts when you bundle your insurance policies under one roof. If you have a renter’s or a home insurance policy, you may also get a discount on your car insurance policy. Several insurance carriers also offer discounts if you insure more than one car under your policy. 

4. Take advantage of discounts 

Students, veterans, and good drivers can often get discounts on their car insurance policies. Check with your local representative to see what discounts you’re eligible for. 

5. Complete a defensive driving course

Local driving schools offer defensive driving courses to supplement the curriculum you must master to obtain your driver’s license. Enroll in a course to improve your skills and potentially earn a discount on your monthly premiums. 

6. Install a telematics device 

Telematics devices typically plug into your onboard diagnostics (OBD) port. These devices report your driving habits to your insurance carrier and may qualify you for additional discounts if you drive responsibly. 

Whether you lease or finance a vehicle, insuring it can look very similar. Both policies must adhere to state requirements and stipulations set out by the financing or leasing companies. Consider the insurance requirements set out by General Motors (GM) as an example.

Financed car

GM requires full coverage on a financed car. These requirements include liability (bodily injury and property damage), collision, comprehensive, medical payments (MedPay), personal injury protection, and uninsured/underinsured motorist coverage. Each component has either a dollar amount limit or a deductible.  

Guaranteed asset protection insurance, or gap insurance, kicks in if the insurance company totals your financed or leased vehicle after an accident. Without gap insurance, you’d be left paying off the loan or lease without a vehicle to drive, in addition to a loan or lease you’d have to get to have a car to drive. 

Gap insurance is not required in any state, but it can be a wise choice if you are financing or leasing a vehicle. GM offers gap insurance on its leased and financed vehicle lineup, including Buick, Chevrolet, GMC, and Cadillac. 

Leased car 

One of the first questions to ask before leasing a car is what insurance requirements exist. When you lease a car from GM, you must have the following car insurance coverage: 

• Bodily injury: $100,000 per person and $300,000 per accident
• Property damage: $50,000 per person and $500,000 per accident or combined single limits 
• Comprehensive and collision: Including fire and theft, with a $1,000 deductible

GM offers gap insurance policies, but some of the best car lease deals from other manufacturers already have a gap insurance policy in place. You’ll see “gap waiver” or a similar phrase on your lease contract if this is the case. If you see “gap waiver,” be sure to obtain the details of the gap insurance policy should something happen to the car. 

If the leasing company doesn’t offer gap insurance, adding it to your car insurance policy is a good idea. Since you do not own the vehicle, you must list the leasing company as the additional insured and loss payee on the policy. If an accident occurs, the insurance company will compensate the leasing company for the loss of their asset. 

Tesla offers leasing and financing, so it’s a great example to show the cost of car insurance for a leased and financed car. Leasing and financing a Tesla are available in California, Texas, and New York. Note that Tesla leases already have gap insurance, so you won’t have to source that coverage. 

The table below compares car insurance coverage requirements from Tesla and the state. Full coverage limits are also included for comparison if you are financing a Tesla purchase. 

Note that Tesla’s “physical damage insurance” includes comprehensive and collision. Insurance carriers may include these two liability components as a package under “physical damage insurance,” or you can add them to your policy separately. 

Here are the average car insurance rates within each state for a six-month policy term: 

Tesla requires a bit more coverage than just liability only. However, these values should give you an idea of how much you’ll pay over six months. Check with your local car insurance representatives for more accurate quotes based on your personal policy details. 

Insuring a leased car can be more expensive, depending on how much you typically pay for car insurance and what coverage you select. Drivers who opt for the state minimum and nothing more will pay more for car insurance on a leased vehicle. If a driver typically selects full coverage, there should be little to no increase in the monthly premium with a leased vehicle. 

Knowing what car insurance coverage you need and how much it will cost can feel like a guessing game. That’s not the case with a FINN car subscription. FINN standardizes the cost of car insurance so you can budget for a single monthly rate. That rate applies no matter where you live or at what rate your personal car insurance premiums are set.