Insuring a Leased Vehicle

This is an overview of what is required to insure a leased vehicle. Learn what types of coverage that you might need, how to get insurance discounts, and more.
Written by Elan Mcafee
Reviewed by Carrie Adkins
Leasing a car? Here's why you're legally required to have liability coverage, which other types of coverage you may need, and how to save money on the coverage you need.
Car insurance is a necessity whether you own or
lease
a car, but you'll need to consider different priorities if you're leasing instead of
buying
. When insuring a car that you own, you are responsible for choosing the level of coverage. With leased cars, however, your lender may require you to have higher
levels of coverage
. Here are some factors to examine when determining the best type of insurance for a leased car.
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Coverage required by law

Unless you live in
New Hampshire
, which does not require car insurance, you are legally required to have
liability coverage
. This minimum insurance covers damage to other people and property when you are at fault in an accident. It does not, however, cover any of your medical bills or car repair costs. If you only have liability coverage, you will need to pay for those costs out of pocket in the event of an accident.
Many states also require drivers with leased cars to carry
uninsured and underinsured motorist
coverage. If you are in an accident with an at-fault uninsured driver, or one whose insurance doesn't completely cover your car repair costs, your uninsured and underinsured coverage will keep you from paying out of pocket.

Coverage required by your leasing agent

Beyond liability and uninsured/underinsured motorist coverage, the leasing agent or company may stipulate renters also carry
collision
and
comprehensive
coverage (known together as full coverage).
Together, these two types of coverage protect you and your car from almost all types of damage. Collision insurance covers any collision involving your car, regardless of whether you were on the road, whether you hit another car or a stationary object, or whether or not you were at fault. For example, if you took your eyes off the road and crashed into a tree, your collision insurance would still cover any medical or car repair costs.
Comprehensive coverage, on the other hand, covers incidents outside of your control, such as
natural disasters
, vandalism, or
theft
, regardless of fault. For example, if your car is caught in a flood that ruins your engine, comprehensive insurance will cover the repair or replacement costs.
However, it will not cover anything within your control. If you leave the window open during a rainstorm, for example, any damages to the interior will not be covered, since you were the one who left the window open.
Ultimately, these additional coverages protect the leasing agent’s investment, and keep you and your car safe on the road.
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Included coverage in the lease agreement

Before you shop for the best car insurance for a leased car, ask if there is any included coverage in your lease agreement. Many agents or companies carry their own
gap insurance
that protects against unforeseen accidents—if you total a leased car while you're still paying off your loan, your gap insurance will cover whatever amount you still need to pay off.
While not all lenders include coverage, it's always worth asking! That way, if you do have a serious accident, you can make sure that you don't pay twice over.

Look for leased car insurance discounts

When weighing insurance options for your leased vehicle, don’t forget to inquire about
discounts
. Many companies will lower the price if you have a
good driving record
. The type of car you lease also plays a role in potential discounts: the more
safety features
it has, the better!
Other things that may gain you a discount are a
high credit score
, being a student with good grades, and accepting a higher
deductible
. You have nothing to lose in asking about discounts, and insurance companies are unlikely to advertise them otherwise.
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Hopefully by learning more about insurance requirements for leased cars, you'll be able to easily get the coverage you need and find the right discounts for you!
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