Finding the Right Insurance for Your Leased Car

Feb 18, 2021

Auto Ins

Finding the Right Insurance for Your Leased Car

Leasing a car can be a good option for many drivers. Whether you purchase or lease a vehicle, you still have to have liability insurance. Your state and leasing company will typically determine the types of auto insurance coverage you must carry and the minimum policy limits for driving a leased car.

State Car Lease Insurance Requirements

When you're driving a leased car, you're assuming liability for any auto accident injuries or damages you might cause to other motorists. That's why your state requires that you have a certain amount of auto liability insurance to be able to compensate crash victims if you're found liable.

Each state sets the minimum liability insurance requirements. As such, the least amount of coverage required depends on the state where your car is registered. At the very minimum, you'll need to purchase two types of liability insurance when you lease a car.   

Bodily Liability: This mandatory policy covers medical expenses incurred by other people in an auto crash for which you're liable. While the limits on your policy will depend on your state's requirements, you typically need at least $25,000 per person and $50,000 per auto accident.

Property Damage Liability: If you damage another person's car or property in an accident, this coverage takes care of repair costs. You may need a minimum of $10,000 in property damage liability insurance per accident.

On rare occasions, you may need these additional policies:

  • Underinsured/uninsured motorist.
  • Personal injury protection.

Common Leasing Company Insurance Requirements

Most leasing companies have additional auto insurance requirements that you'll need to meet to drive their vehicles. Before agreeing to a lease deal, it's essential to know what the leasing company requires for coverage for the vehicle you are looking to lease. Certain car models can cost more to insure than others.

Leasing companies often impose additional insurance requirements to protect themselves against loss if their leased car is damaged or lost in a crash, a natural disaster, vandalism, or theft. As such, you must name the leasing company as an additional insured and loss payee in your insurance for leased cars. The leasing company owns the insured vehicle, so they're the rightful recipient of any insurance payment for damage to the leased car. Usually, a potential leasing company will require that you have the following additional auto insurance protections: 

  • Collision coverage: It covers damage to the leased car resulting from a crash.
  • Comprehensive coverage: This policy covers car damage or loss due to events such as natural disasters, vandalism, fire, and theft.

Different leasing companies may require different levels of coverage, which can be higher than the state minimum. For example, a leasing company may require a minimum of $100,000 in bodily liability protection per person and $300,000 of property liability coverage for each accident.

Similarly, some leasing companies require a maximum deductible and gap insurance for collision and comprehensive coverage. If your leasing company requires a higher amount of auto insurance coverage than the state minimum, it'll cost more to insure their leased car.

The Role of Gap Insurance for Leased Cars

If your leasing company asks that you add gap insurance to your auto policy, they're simply looking to match the amount owed with the actual value of the leased car. This additional coverage makes sense when insuring new cars that lose value quickly once sold. 

At the very minimum, you need to carry auto liability insurance to drive a leased car. If you're not sure about your state's insurance requirements for leased vehicles, contact the experts at C.V. Mason Insurance Agency in Bristol, Connecticut. We'll gladly help you get the right amount of auto insurance coverage within your budget.