If you lease a car, you must purchase enough insurance coverage to drive legally in your state, as well as any insurance your lessor requires.
When compared to purchasing a vehicle, leasing often results in lower upfront costs. Whether you lease or buy your next set of wheels, you'll need to pay for car insurance.
When you lease a car, you must meet both of your:
In some cases, leasing a car rather than purchasing it outright may necessitate additional insurance coverage.
State car insurance requirements
You must meet your state's minimum car insurance requirements whether you finance or lease your vehicle. The amount of coverage and the type of insurance required vary by state.
Depending on where you live, the following coverage may be required:
Leasing company requirements
Leasing companies frequently require higher liability limits than the state minimums, which will increase the cost. In addition to the coverage required by your state, you will most likely need to purchase:
You may also need gap insurance, which pays out if you total your vehicle, depending on your lessor. This coverage compensates you for the difference between the value of your vehicle at the time of the accident and the amount owed on your car loan or lease.
For example, suppose you lease a car for $35,000 and total it a week later. At the time of the accident, the car was worth $33,000. Gap insurance will pay the $2,000 difference between the value of your car and the amount owed on your lease, which is covered by collision insurance.
Coverage type | What it pays for |
Liability coverage | Medical costs due to injuries or deaths from an accident you caused, and repair costs for property you damaged. |
Uninsured motorist coverage | Medical and repair costs after an accident with an uninsured driver. |
Underinsured motorist coverage | Expenses from an accident with a minimally insured driver. This coverage pays once the underinsured driver’s coverage limits have been met. |
Collision coverage | Repair expenses from traffic-related accidents, regardless of who is at fault. |
Comprehensive coverage | Repair costs from events outside your control — including weather events, hitting an animal while driving, theft and vandalism. |
Medical payments coverage | Medical expenses for you and your passengers after an accident regardless of fault. |
Personal injury protection insurance | Medical expenses, as well as lost wages, child care, funeral costs and other losses due to an accident regardless of fault. |
Gap insurance | The difference between what you owe on your car and your car’s true market value. |