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Best Cheap Insurance Leased CarsBest Cheap Car Insurance for Leased Cars (2023)
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By , Content Director
Fact Checked
By , Director, Corporate Communications, Insurance Information Institute
Updated: Nov 14, 2023
In most cases, leasing a car involves getting full insurance, including liability, comprehensive and collision coverage. This ensures that in case of an accident, your insurance can pay for damages for both your car and the other party’s car.
Some state laws may also require personal injury protection coverage (PIP), which pays for your medical expenses in case of an accident. Uninsured and underinsured motorist coverage, which covers damages if you get into an accident with a driver who doesn't have any insurance or not enough to cover the loss, is another potential requirement. Aside from state requirements, lessors may request higher liability limits than the state requires or even gap insurance.
Best Cheap Insurance Leased CarsBest Auto Insurance for Leased Cars
Cheapest Overall for Leased Cars - State Farm
Cheapest Runner-Up - Nationwide
Cheapest for MIlitary - USAA
Key Takeaways
Most car leasing companies will require full coverage car insurance, which consists of liability, collision and comprehensive coverage, and may require higher liability limits than the state minimum.
State Farm offers the best insurance for leased cars, with premiums averaging $883 annually.
You can save on leased car insurance costs by shopping around and comparing providers, taking advantage of discounts or increasing your deductibles.
Overall Cheapest Car Insurance for Leased Cars
Based on our analysis, State Farm has the cheapest insurance for leased cars annually, costing an average of $883 for a full coverage policy. Keep in mind that leasing a car usually involves getting at least full coverage insurance, as most lessors will require it to protect their investment.
State Farm
State Farm’s leased car insurance costs an average of $883 a year, but this could change based on several factors — such as your personal circumstances and any discounts that apply. State Farm offers some common major discounts for bundling multiple insurance types, safe driving, multiple vehicles, defensive driving and more.
MONEYGEEK EXPERT TIP
Before leasing a car, plan to get full coverage insurance on top of your state’s minimum requirements. This is meant to protect the lessor’s investment, as comprehensive and collision coverage pays for damages to the automobile. Some lessors may also ask for higher liability limits.
Cheapest Auto Insurance for Leased Cars Runner-Up
Nationwide is the second-best and cheapest provider for leased car insurance, at an average of $930 per year for a full coverage policy.
Nationwide
Nationwide’s full coverage policies for leased cars cost an average of $930 per year, but you can save more if you qualify for any of the company’s range of discounts. The discounts it offers include defensive driver, good student, anti-theft, bundling, safe driver and more. You can also get discounts for setting up automatic payments.
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Cheapest Leased Car Insurance for Military Members
USAA provides coverage exclusively for the military community, including active-duty, veterans, reserves and their immediate family members. USAA offers the cheapest full coverage rate for leased cars at an average of $679 per year.
USAA
On average, USAA policies are $679 annually for full coverage — the cheapest in MoneyGeek’s analysis. Policyholders can make their insurance even cheaper with USAA’s discounts, which include bundling, safe driving, defensive driving and more. The company also offers military-related discounts, such as discounts for garaging your vehicle on base.
However, USAA is only available to current and retired military members and their family members.
How Much Is the Cheapest Auto Insurance Coverage for Leased Cars?
At an average of $883 per year, State Farm's full coverage auto insurance is the cheapest coverage for leased cars. Active duty and retired military members can get USAA's coverage for as little as $679 annually. Full coverage insurance is best for leased cars since most lessors require liability, comprehensive and collision coverage.
Is it More Expensive to Insure a Leased Car?
If you are used to paying for state minimum liability-only coverage, the cost of car insurance for a leased car may seem more expensive, as lessors often require full coverage. However, it comes with more protection, including liability, comprehensive and collision coverage.
What Are the Insurance Requirements for Leasing a Car?
If you plan on leasing a car, insurance is something you’ll need to buy. Lessors often require full coverage insurance to protect their investment. After all, leased cars eventually return to the lessor, and it will want to ensure any damage is covered.
Full coverage includes liability, comprehensive and collision coverage, but it can also include uninsured and underinsured motorist coverage, personal injury protection (PIP) coverage and/or gap insurance.
Financed Car Insurance Requirements
Required Coverage | Description |
|---|---|
Liability insurance covers bodily injury liability and property damage liability. Bodily injury covers the injuries of the other driver and the occupants of the other car, while property damage covers the damages to the other driver’s vehicle. | |
Comprehensive coverage pays for your car's damages in case of an accident that isn’t caused by collisions with other vehicles, such as theft, vandalism, natural disasters, fires and more. | |
Collision coverage pays for damages to your car caused in an accident involving another vehicle or an object, such as a tree, fence or light pole. Collision also covers rollover accidents and pothole damage. | |
Uninsured and underinsured motorist coverage pays damages to your vehicle if you are in an accident with an uninsured driver or a driver who does not have enough coverage to pay for your damages and injuries. It may be required in some states on top of liability coverage. | |
Personal injury protection (PIP) pays for your medical bills and that of your passengers if you get into an accident. It may also be a requirement in some states. | |
Gap insurance covers the difference between the value of a car and what you owe on it. |
Do You Need Gap Insurance When Leasing a Car?
Guaranteed asset protection insurance, or gap insurance, is a type of coverage that can help you recover the difference between the value of the car and what you owe on it. Standard insurance policies don’t cover what you paid for the car — instead, it pays you the actual cash value (ACV). Because of this, some lessors may require you to get gap insurance in case the car gets stolen or written off while you are leasing it.
Even if it’s not required, getting gap insurance is wise if the loan value of your car is greater than the value of your leased car.
HOW DOES SR-22 INSURANCE WORK WITH A LEASED CAR?
If you require an SR-22 or FR-44 — proof that you carry the required insurance mandated by law after a severe moving violation — it will not impact your ability to lease a car. Your lender will make sure you carry the required car insurance for the leased vehicle, but having an SR-22 or FR-44 isn't a concern. However, because car insurance is often more expensive with an SR-22 or FR-44, you may face quite an increase in your premium by leasing a new vehicle, which typically costs more to insure for any driver. — Mark Friedlander, Director, Corporate Communications, Insurance Information Institute
What to Do With Your Policy When the Lease Contract Is Done?
You can cancel your car insurance policy if your lease contract has ended. However, if you plan on extending the contract, leasing a new car or purchasing your leased car, it’s important to know what to do with your policy and what to tell your provider.
1
If Extending Your Lease Contract
If you plan to extend your car lease, it’s important to keep your policy active. Inform your insurer about your extension to ensure the proper adjustments are made. Failure to keep your policy active could lead to your lessor repossessing your leased car.
2
If Leasing a New Car
If you plan on leasing a new or different car or switching lessors, you must inform your provider. Depending on the car, your costs could go up or down, so updating your provider is important.
3
If You Plan On Buying Your Leased Car
If you plan to purchase your leased car, you need to inform your insurance provider and have the lessor removed from your policy. This will also allow you to adjust your limits below your lessor’s requirements if you need to save.
How to Save on Leased Car Insurance
While insuring a leased car may be costly — especially if you’re used to the state minimum policies — there are ways to find the best car insurance quotes. You may qualify for discounts, increase your deductibles or shop around to get a better deal.
Take Advantage of Discounts
Most insurers offer discounts, but they can vary between insurers. Common discounts include safe driving, bundling multiple policy types, insuring multiple cars and defensive driving. Ask your insurer what kind of discounts you might qualify for to not miss out on savings.
Increase Deductibles
Your collision and comprehensive deductible is how much you will pay out of pocket after an at-fault accident before your insurance coverage kicks in to repair your vehicle. Requesting a higher deductible on one or both of these coverages can result in lower payments, making insurance cheaper — you do not have to have the same deductible for each. However, you may need to pay more out of pocket if you file a claim. With liability coverage, you do not have a deductible.
Shop Around
Requesting several quotes and comparing providers can help you find the best rates. The way insurers determine premiums can vary, which means you may get a more affordable option with a different provider. Try to get a minimum of three quotes and narrow down your choices based on the cost, discount opportunities, reviews and perks.
If you want to know how much you might need to pay, use our car insurance calculator.
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Frequently Asked Questions
Get a deeper understanding of car insurance for leased cars with our answers to some of the most frequently asked questions.
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