Leased Vehicles Coverage: Will I Pay More?

Before choosing whether to lease or buy a car, you should understand the insurance portion of the equation.

Do Leases Include Car Insurance?

Most leases do not include auto insurance, so you have to pay for it separately. However, some leases include gap coverage, which covers the gap between the car’s original value and its current value after depreciation. You’ll need to fulfill the rest of the insurance requirements on your own.

When obtaining insurance for a leased car, you must consider both your state’s and your leasing company’s auto insurance requirements.

State Requirements

The first step is to determine your state’s auto insurance requirements. You can check how much car insurance you need by state in our auto insurance guide. You may be required to buy additional coverage types, such as the following.

• Liability insurance: Liability coverage includes bodily injury coverage and property damage liability coverage, which cover the other party’s injuries and property damages in at-fault accidents.
• Medical payments coverage: Medical payments coverage, also known as personal injury protection, covers your passengers’ and your injuries in at-fault accidents and is a requirement in no-fault states like Florida. Compare liability vs. no-fault systems.
• Uninsured motorist coverage: If you get into an accident with someone who has insufficient or no insurance, or a hit-and-run, uninsured motorist coverage will cover your damages.

There are two states that don’t require auto insurance: Virginia and New Hampshire. However, if you lease a car in one of these states, you’ll still have to buy insurance coverage.

Lessor Requirements

Your leasing company will most likely require you to have both comprehensive and collision coverage as well as gap coverage.

• Collision coverage: Collision coverage pays for damages to your vehicle in the event of an accident you caused. This differs from property damage coverage, which only covers the other party’s car.
• Comprehensive insurance: Comprehensive coverage covers damages to your car from events other than collisions, such as burglaries, vandalism, and weather-related incidents like hail.
• Gap coverage: Gap coverage is typically rolled into lease payments and means that if you total your car, you won’t have to pay the dealer the amount your car has depreciated since its inception.¹ In other words, gap coverage covers the vehicle’s depreciation.

Given that leasing companies have higher auto insurance requirements than state governments, people with leased cars usually pay more for auto insurance than people with owned cars who only have the minimum coverage.

Factors That Affect Car Insurance Premiums

The types of coverage you have are just one of many factors that affect auto insurance rates. These are some other factors in the cost of auto insurance.

• Size of the deductible: A higher deductible for collision or comprehensive coverage means lower premiums, and vice versa. Read more about how deductibles work.
• Vehicle: Your vehicle’s make, model, and year affect its safety ratings, which factor directly into premium costs.
• Mileage: Those with long commutes and high mileages pay more, as they have more opportunities to incur damages and file claims.
• Where you live: People in cities pay more for auto insurance than people in the suburbs or the country, as damages are more likely to occur in urban areas.
• Driving record: People with histories of DUIs, at-fault accidents, and tickets have higher car insurance rates.
• Credit history: In every state except Massachusetts, Hawaii, Michigan, and California, companies can charge higher premiums to those with bad credit histories. Learn more about the relationship between car insurance and credit scores.
• Age: First-time drivers pay more than more experienced drivers over the age of 25.
• Marital status: Married people are less likely to file claims than single people, even those who have been married in the past. Therefore, if you’re married, you’ll pay less for auto insurance than your single counterparts.
• Sex: In every state except California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania, men pay more for car insurance than women.

While some factors fall outside of your control, there are ways you can lower insurance costs, even on leased vehicles.

1. Compare quotes. Never accept a first offer. Compare auto insurance quotes from different providers to see who can provide the most affordable coverage.
2. Use discounts. See what auto insurance discounts your provider offers. These could include discounts for taking a defensive driving class or enrolling in automatic billing.
3. Bundle your insurance. If you also need homeowners, renters, or business insurance, buy it with your auto insurance from the same provider to save money.
4. Raise your deductible. Higher deductibles have lower rates. Just make sure that you could actually pay your deductible if you were in an accident tomorrow.²

Follow these steps to get car insurance on a leased car:

1. Do your research. Find out what coverages both your state and your leasing company require. Determine if you want any supplemental coverages and the limits you’d like for each coverage.
2. Get quotes. Compare quotes from a few different auto insurance companies before settling on one.
3. Talk to an agent. Once you’ve settled on a company, contact an agent or broker to help you choose a policy.
4. Pay your premium. To begin your coverage on the policy’s effective date, pay your first premium.

We’ve all experienced the shift from one-time payments to subscriptions. It seems like everything has a subscription these days, from TV to food delivery to newspapers. Well, car companies want in, with many now offering subscription services.

With a flat payment, you can rent a car — including insurance, maintenance, and sometimes even roadside assistance — for periods as short as one month. The benefit of car subscription services is that you can more easily trade in your vehicle than with a traditional lease. However, as you’ll see, the negatives (specifically the cost of car subscriptions) typically outweigh the positives.

Available Car Subscription Services

Here are the car subscription services on the market currently.

Are Car Subscriptions Worth It?

As you can see from the prices above, car subscriptions are expensive, starting at $499 a month. They often charge high enrollment fees and cost more than leasing a vehicle, even with insurance included. Another negative is that many of these subscription services cap your mileage and make you pay extra for any miles over the limit. Plus, if you have a shaky driving history, you’re unlikely to qualify for a car subscription service in the first place.³

However, if you have cash to spare and want a luxurious and convenient service, then a car subscription service may be right for you. One inexpensive option is Yoyo, which simply charges by the mile. If you need a car for a very short time, this could be an affordable solution.

Even though you’ll have to pay more for car insurance, leasing a car vs. buying it outright has its advantages, like lower monthly payments. Plus, if you want to keep the car at the end, you can buy it from your lessor. If money for a buyout is a concern, there’s always auto loans.