There are many benefits to leasing a car, including being able to drive a new vehicle without the long-term financial commitment. But while leasing a car could save you money on long-term payments, it’s important to budget the cost of car insurance for leased cars.
Car insurance for a leased car works similarly to insuring a vehicle that you own. However, since you’re leasing a vehicle from a company that owns it, your lease contract will typically require you to purchase certain types of car insurance coverage. In this case, your car insurance not only protects you financially in case of an accident, it also protects the leasing company in case the vehicle is stolen or destroyed in an accident.
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When you buy auto insurance for a leased car, you’ll need to purchase insurance that meets your state’s minimum car insurance requirements. Nearly all states have minimum liability and property damage requirements, but these minimums are relatively low.
Your lease contract will likely require you to buy full coverage insurance, consisting of collision coverage to pay for repairs caused by an accident, as well as comprehensive coverage to pay for any repairs needed if the car is damaged by non-accident events.
It’s also common for lease contracts to require you to carry liability insurance for at least $100,00 per person and $300,00 per accident. You may also need to buy at least $50,000 of property damage liability coverage.
Most states require you to carry car insurance in order to legally drive. Car insurance can help financially protect you if you’re ever in an accident that injures someone else or damages their vehicle. It also helps protect you against losses caused by vandalism, weather, and other events.
Additionally, your lease contract will specify the type and amount of insurance that you must maintain on the vehicle. A dealership will require you to provide proof of your insurance before you’re allowed to take the car.
Leasing a car might have a minimal effect on your premiums, but if you’re leasing a more expensive vehicle, you’ll pay higher premiums. Additionally, since your lease contract might require you to buy additional or higher coverage limits, you’ll pay more for that extra coverage than you might pay when insuring your own vehicle.
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You’re responsible for paying all car insurance costs on a leased vehicle. Remember, your car insurance protects you as well as the lease company.
You’ll need to budget for car insurance when you lease a vehicle, but you can save money on car insurance by qualifying for discounts, like paperless billing, and maintaining a clean driving record.
Shopping around for car insurance can also help you find the best deal on your coverage. You can get free car insurance quotes online today to start comparing policies to find the lowest rates on the coverage you need.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
