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Is Car Insurance More Expensive When You Lease

Is Car Insurance More Expensive When You Lease?

If you’re considering leasing a vehicle, one of the key factors you need to consider is the cost of car insurance.

It’s a common question:

Is car insurance more expensive when you lease?

The answer, in many cases, is yes.

But why is this the case, and what can you do about it? Let’s delve into the details.

Why is Insurance More Expensive for Leased Cars?

When you lease a car, you’re essentially renting it for a predetermined period, typically two to four years. The leasing company, which technically owns the car, wants to protect its investment.

As a result, they usually require lessees to purchase more comprehensive insurance coverage than what’s legally required by the state. This coverage often includes collision insurance, which covers damages from an accident, and comprehensive insurance, which covers non-collision related damages such as theft or fire.

Moreover, leasing companies often require higher liability coverage limits.

For instance, they might require $100,000 in bodily injury liability coverage per person and $300,000 per accident, as well as $50,000 in property damage liability insurance. These requirements are typically higher than state minimums, leading to higher insurance premiums for leased vehicles.

Factors That Affect Car Insurance Cost

Several factors can affect the cost of car insurance, whether you’re leasing or buying.

These include:

  • Your personal driving record,
  • The type of vehicle you’re insuring,
  • And even your credit-based insurance score.

Cars that are more expensive, sportier, or more likely to be stolen often cost more to insure. If you have a history of traffic violations or accidents, you may also face higher premiums.

How to Save Money on Car Insurance for Leased Cars

Despite the higher coverage requirements, there are ways to save money on car insurance for a leased car potentially.

  1. Compare Quotes: Different insurance providers may offer different rates, so it’s beneficial to shop around and compare quotes.
  2. Ask About Discounts: Many insurance providers offer discounts for safe drivers, military service members, seniors, and high-achieving students. You might also get a discount for bundling your auto insurance with other policies, like homeowners or renters insurance.
  3. Improve Your Credit: Some states allow insurance companies to consider your credit-based insurance score when determining your premiums. Improving your credit score could potentially lead to lower insurance costs.

The Bottom Line

While leasing a car can offer flexibility and lower monthly payments compared to buying, it’s important to factor in the potential for higher insurance costs. By understanding the insurance requirements and shopping around for the best rates, you can make an informed decision that fits your budget and lifestyle.

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Picture of Steve Momot - Author

Steve Momot - Author

Steve, a seasoned expert in the automotive industry, formerly held a car dealer license in Florida. With extensive experience spanning across car trading and mechanical work, he founded Autohitch. His mission? To guide both buyers and sellers through the intricate maze of car purchasing, ensuring a seamless and informed experience. Outside of the automotive world, Steve has a passion for fishing and capturing the beauty of nature through photography.


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