Leasing a car can be an attractive option for many people who want to drive a newer vehicle every few years. When considering whether to lease a vehicle, the cost of insurance may be an essential factor in your decision. Learn more about the cost of insurance for leased cars and discover ways to save money on your vehicle lease, car insurance cost, and more
Your Vehicle Lease: Car Insurance Cost and More
Whether you lease, finance, or own a vehicle has no impact on the cost of your auto insurance. However, you may still pay more for car insurance if you lease a vehicle because of the requirements of the dealership or company leasing you the car, known as the lessor. Many lessors require drivers to have comprehensive and collision insurance, covering repair costs for the leased vehicle after an accident or other event, such as vandalism. That’s more insurance than state laws require, and you will pay more for this coverage than the minimum insurance you’re legally obligated to have.
Some lessors may also require you to have higher liability coverage amounts than the state minimum, which can raise the price of your car insurance. According to Car and Driver, lessors will often require you to have bodily injury liability coverage of $100,000 per person and $300,000 per accident, and property damage liability of $50,000 per accident. In addition to higher coverage amounts, lessors may have maximum deductible restrictions, increasing your premium.
What Insurance Do You Need for a Leased Car?
Along with liability, comprehensive, and collision coverage, you may need to purchase other types of insurance for your leased car. Some states require drivers to have personal injury protection insurance, which covers medical expenses for you and your passengers after an accident. Other states require drivers to have uninsured or underinsured motorist coverage, which pays for your medical bills or repair costs if an at-fault driver doesn’t have enough insurance to cover the expenses. State requirements for insurance apply to all drivers, whether you lease or own a car.
In addition to these requirements, lessors may require you to have gap insurance (guaranteed asset protection) for the vehicle. According to the Insurance Information Institute, many auto dealers purchase a master policy for all leased cars and charge you for the cost of gap insurance in your lease payments. Suppose your vehicle becomes totaled in an accident. In that case, gap insurance covers any difference between the amount you owe the lessor for the car and the amount you receive from your insurance company. Since leased vehicles depreciate quickly, this coverage can be beneficial because you won’t pay the out-of-pocket difference.
How To Save Money on Your Lease: Car Insurance Cost Demystified
When shopping for car insurance for your leased vehicle, you can work to save money on your premium in several ways. Explore some strategies to help you save money on your vehicle lease. Car insurance cost figures don’t have to overwhelm you:
Go online to receive car insurance quotes from different companies. Compare the quotes you receive to help you choose the most affordable policy. Get quotes with all the insurance you need for the leased vehicle, including comprehensive and collision coverage.
Many car insurers offer discounts to drivers for various reasons. For example, you may be eligible for a discount if you have a safe driving record or complete a defensive driving course. Companies often offer discounts to older adults, military members, and students with good grades. Ask your insurance company about any discounts you may be able to receive.
Bundle Your Insurance
It’s common for insurers to offer savings if you bundle your auto insurance with another policy. For example, you can usually bundle car insurance with homeowner’s or renter’s insurance. Get a quote from your insurance company to see if you could save money by bundling your insurance.
Maintain or Improve Your Credit Score
Your credit history can affect the cost of your car insurance because many insurers use your credit score to determine your premium. They view people with good credit as less likely to make a claim. Work to maintain or improve your credit score to ensure you’re receiving better car insurance rates. You can check your credit score regularly to make sure it’s accurate.
How To Provide Proof of Insurance for a Leased Car
Lessors typically require you to provide proof of insurance for the length of your lease contract. Follow these steps to prove you have insurance for a leased car:
- Ask about insurance requirements: Before purchasing insurance for your leased vehicle, check with the lessor about the minimum insurance requirements. This way, you can be sure you’re obtaining the correct insurance.
- Consider additional coverage: Once you know the minimum insurance requirements for your lease, consider whether you’d like additional coverage for the vehicle. For example, you may decide to have higher liability amounts to reduce your out-of-pocket costs if you get into an accident.
- Choose your policy: Shop around and get auto insurance quotes from different companies. Choose the policy that best meets your needs, preferences, and budget.
- Get proof of insurance: Once you purchase your insurance, ask the insurance company to email or fax the proof of insurance to you or the lessor directly. If you know the leased car’s vehicle identification number, you can complete this step before going to the dealership to save time.
- Sign your lease: If the insurance company sent the proof of insurance to you, provide this document to the lessor when you sign your lease agreement. Once you’ve finalized the contract, you can drive home in your new car.
When you decide to lease a vehicle, consider the lease, car insurance cost, and your financial situation as part of your budget. It’s essential to choose a policy you can afford to meet the lease requirements and protect yourself if an accident occurs. Once you have the right insurance policy in place, you can get the keys to your new car and hit the road.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.