Leasing A Vehicle: Is Insurance Included?

When you lease a vehicle, insurance is not typically included as standard. However, it is possible to find leasing deals that do include insurance, which will be reflected in the price you pay. Standard car leasing agreements don't come with vehicle insurance, but insured leases are available, where you pay a rental sum for your contract term that includes car insurance and vehicle leasing.

Collision coverage

The cost of collision coverage varies depending on various factors, such as the driver's age, gender, and driving record, as well as the vehicle type and location. The deductible for collision coverage, which is the amount paid by the policyholder per claim, typically ranges from $500 to $1,500, with $500 being the most common. While collision coverage is not legally required, it is highly recommended, especially for those who lease or finance their vehicles, to provide financial protection in the event of an accident.

Comprehensive coverage

When leasing a vehicle, it is important to understand the different types of insurance coverage available to you. One such coverage is comprehensive insurance, which offers financial protection for damage to your vehicle caused by events other than a collision. This type of coverage is particularly relevant if you lease a vehicle, as it can provide peace of mind and ensure you are not left with a financial headache.

Comprehensive insurance is an optional coverage that protects your vehicle from damage caused by incidents outside of your control, such as natural disasters, theft, vandalism, glass and windshield damage, fire, and accidents with animals. It is important to note that comprehensive insurance is not the same as full coverage. While comprehensive insurance covers non-collision-related damage, full coverage typically includes both comprehensive and collision insurance, as well as any other coverage mandated by your state.

The cost of comprehensive coverage can vary depending on various factors, including your age, gender, marital status, driving record, the vehicle you drive, and your state of residence. On average, comprehensive coverage can range from $150 to over $250 per year, but it is worth checking with insurance providers to get a more accurate quote.

When leasing a vehicle, it is likely that your leasing company will require you to carry comprehensive coverage. This is because leased vehicles are typically subject to higher insurance requirements than financed or owned vehicles. By including comprehensive coverage in your insurance policy, you can ensure that you meet the minimum standards set by your state and your leasing company.

Liability coverage

When leasing a vehicle, insurance coverage is required and you must have it before driving the vehicle off the lot. The type and amount of car insurance required varies from state to state, and your leasing company will likely have certain requirements as well.

Liability insurance is the most common type of car insurance required by states. This insurance covers medical expenses and property repairs resulting from damage caused by your vehicle. It has two categories: bodily injury liability and property damage liability.

Bodily injury liability coverage pays for medical expenses for other people after an accident. A minimum of $25,000 per person and $50,000 per accident is most common. However, some leasing companies require higher bodily injury liability limits, such as $100,000 per person and $300,000 per accident.

Property damage liability coverage pays for damage to other people's property after an accident. A minimum of $10,000 per accident is typical. Some leasing companies require a set amount of property damage liability coverage, such as $50,000.

In addition to liability insurance, many states also require uninsured/underinsured motorist coverage and personal injury protection. These coverages can help pay for medical expenses for you and your passengers after an accident.

It's important to note that the minimum coverage required by a state may not be sufficient to cover all the costs resulting from an accident. Therefore, selecting higher liability limits is recommended to increase your protection.

When leasing a vehicle, it's crucial to understand the insurance requirements of both your state and your leasing company. Make sure to review your lease agreement carefully and consider consulting with an insurance professional to ensure you have adequate coverage.

Gap insurance

The benefit of gap insurance is that it can save you thousands if something happens to your leased vehicle. For example, if you lease a new car valued at $30,000, and a week later, it is totalled in an accident. If your insurance company values the car at $27,000, then gap insurance will cover the $3,000 difference between what insurance will pay out and what you owe on the lease. This prevents you from having to make payments on a car you no longer have.

There is usually a limit to the maximum benefit you can receive from gap insurance, ranging from $30,000 to $125,000 depending on the policy. Gap insurance for a leased vehicle can be included in your monthly lease payments or purchased as a one-time upfront fee. It is worth shopping around, as you may find it more cost-effective to add gap coverage to your existing car insurance policy.

Third-party insurance

Leasing companies will insist on fully comprehensive coverage for their vehicles to protect their assets. This means that, in the event of an accident, you would be covered for damage to other drivers/passengers, other vehicles, and any injuries you sustain yourself.

In some places, such as Ontario, the minimum third-party liability coverage required by leasing and finance companies is $1 million, as opposed to the minimum $200,000 required by the provincial government. However, $1 million liability coverage is also offered to people who own their cars and can be a default option, so you might not have to pay more for that coverage.

Frequently asked questions