Car Insurance for a Leased Vehicle

Between gap and liability insurance, is your leased vehicle properly covered?

Car Insurance for a Leased Vehicle


Leasing a vehicle, rather than buying it, is kind of like renting an apartment. You have a lower down payment, you’re under warranty for many of the repairs, and you can get a new car every few years. But, if you lease a vehicle, you’re not earning equity — meaning, when your lease is over, you have no stake in the vehicle and thus cannot sell it. Even though you don’t technically own a leased vehicle, you still need your own insurance for it. And because of the nature of your lease agreement, there are some considerations to think about with leased vehicles. Let’s explore.



  1. Why lease?
  2. What coverage do you need?
  3. Gap Coverage Insurance 101
  4. What to do after your lease ends?
  5. Ways to save?
  6. Getting insurance




Why lease a vehicle?


The decision to lease or finance (or buy outright, if you can) is a personal decision. But, if you’re interested in leasing a vehicle, there are some benefits to consider. First, leasing a vehicle is great if you’re a low-mileage and low maintenance driver. Because most leases have mileage restrictions on their vehicles and require vehicles be kept in good condition, many people find having a lease to be too constraining for their daily life. But if this isn’t a consideration for, leasing might be a good decision.

Another benefit of a leased vehicle is that it tends to be cheaper than financing a vehicle. The way most lease payments work is you’re paying the depreciation that occurs while you use it. Most of the time your monthly lease payment will be lower than a loan payment.

The last major benefit of leasing a vehicle is that you get a new car every few years that’s under warranty. Although you will be responsible for some of the lower maintenance issues like changing the oil or tire rotation, bigger mechanical issues will be dealt through the warranty.





What coverage do you need for a leased vehicle?


Because you’re going to have to return your leased vehicle in the same condition you received it, it’s important to make sure your coverage is spot on. This is the coverage you’ll want:

Bear in mind, however, only having liability coverage will probably put you in violation of your lease agreement because it offers no physical protection to your vehicle in the event of an at-fault accident. So, in addition to these coverages, you’ll need:

A part of collision coverage, gap insurance is most likely required by your leasing agreement as it’s designed for newer vehicles. Basically, gap insurance is designed to protect you against depreciation in the event your vehicle is totaled or stolen. As most claims payout will only give you what your vehicle is currently valued at, you might be underwater if you can’t afford the difference between the lease’s listed value and what your insurance company will give you.





Gap Insurance


There’s a couple things about gap insurance that you should consider. Firstly, not every insurance company actually provides it. For example, while GEICO is one of the largest providers of insurance, they currently do not offer gap insurance.

Secondly, you can get gap insurance from a couple of different sources. Sometimes your leasing company or dealership can provide you with gap insurance, but at an inflated price. Most of the time, the figure they present will be more expensive than what your insurance company would charge you. Your best bet is to find an insurance company that will offer you gap coverage rather than through the dealership.





Your lease ended...now what?


While there’s a lot to say about what your next steps are after your lease ends in terms of getting another vehicle, it’s much more straight-forward when it comes to insurance.

  • If you’re extending your lease: maintain insurance
  • Trading in vehicle for new one: update insurance with new vehicle information
  • Buying the vehicle: remove leasing company from vehicle and update with loan/lien information, if necessary
  • Walking away: if you’re going car-free for a little, just cancel your insurance! You might want to invest in some non-owners insurance.




Ways to Save


If you're already contributing to a monthly lease payment, you'd want to make sure your insurance premium is as low as possible as well. Let's break down our top ways to save on auto insurance for every stage of your car ownership.


Pay Smart

If you have the ability for pay all of your premium up front, you can save some money on your auto insurance. Because you're cutting out the cost of transaction fees and giving your company the premium up front, they tend to reward you with a lower premium. This is also true if you can pay by your bank account rather than a debit or credit card.


Savings Based on Method of Payment

Savings with Paid in FullSavings with EFT
$61$27


Bundle

Keeping all your insurance policies in one basket can help save you time and money!


Savings on Bundlings

Savings with RentersSavings with Home
$73$142


Telematics

Telematics can be a great option for saving money while leasing a vehicle because of how they work. Basically, telematics are plug-in devices that monitor the way you drive to generate a more accurate premium. Driving carefully and less often can result in a lower premium. Because a leased vehicle has mileage restrictions and you need to take care of the vehicle (as you're returning it), this might be a good way for you to save. While this program isn't available in every state, here are some major insurers with corresponding discount possibilities.


CompanyEstimated Savings
Progressive's SnapShotAverage of $130
Allstate's DrivewiseAverage of 10-25%
State Farm's Drive Safe & SaveUp to 15%
Esurance's DriveSenseVaries
Nationwide's SmartRideUp to 40%
Liberty Mutual's RightTrackAverage of 5-30%


Shop around

No matter what stage of owning a car you're in, it's always a good idea to look to see what other companies would be charging you for auto insurance. Only with The Zebra can you shop other rates to see if you could be getting a better rate elsewhere. Get started today.





Getting insurance with a leased vehicle:


If you decide a leased vehicle is right for you, make sure you have the right coverage. You’ll want to inform your insurance company you’re leasing a vehicle as well as add gap insurance to your policy. Remember, it’s almost always cheaper to go through your insurance company rather than the dealership for gap insurance. Start shopping for car insurance for your leased vehicle with us here.


Compare over 200 insurance companies at once!


Recent Questions:

Car Insurance for a Leased Vehicle

What can I expect to pay for first time car insurance?

Sep 13, 2018
Queens, NY

I’m 29 years old, I will be 30 in 2 months. I’ve had my license for 4 years. I’m looking ...

I was billed for forced car insurance even though I already had it

Jun 08, 2018
Glendale, AZ

I read your article on forced auto insurance. I got a loan for a car in 12/17 and showed ...

Will the insurer research to see if my car is financed?

May 14, 2018
Pittsburgh, PA

Is it standard for an agent to inquire about the financing of an auto? Will they review the application to ...

Should I get gap insurance or is full coverage enough?

May 13, 2018
Detroit, MI

I am supposed to get a full coverage auto insurance and the bank is offering me gap insurance along with ...

Additional Resources:

Car Insurance for a Leased Vehicle

What is the State of Auto Insurance in 2018?
What is the State of Auto Insurance in 2018?
Feb 06, 2018

Well, we’ve done it again. We’ve gone and gotten super curious about how car insurance is impacting the 250 million...

What Happens if You Crash a Zipcar?
What Happens if You Crash a Zipcar?
Jan 09, 2018

Car sharing services like Zipcar and Car2Go allow city dwellers to forego car ownership without losing all of the perks....

What I Learned After Totaling My Car 450 Miles from Home
What I Learned After Totaling My Car 450 Miles from Home
Jan 03, 2018

This past May, I took a road trip from Rhode Island to West Virginia to attend a friend’s wedding. Despite...

Do Keyless Ignitions Actually Put Your Car – and Your Life – at Higher Risk?
Do Keyless Ignitions Actually Put Your Car – and Your Life – at Higher Risk?
Dec 14, 2017

No broken windows. No lengthy process of wedging the door open. No hotwiring, no alarm, no concerned passerby dialing 911....

How to File a Car Insurance Claim: Steps, Timing, and Costs to Expect
How to File a Car Insurance Claim: Steps, Timing, and Costs to Expect
Dec 01, 2017

You get in an accident or your car is pummeled with hail. You need to figure out how to get...

Survey: Americans in the Dark about Car Insurance
Survey: Americans in the Dark about Car Insurance
Oct 24, 2017

“What you don’t know can’t hurt you…” … is an entirely false statement in the world of auto insurance. Car...

Introducing the Insurability Score: Your Insurance Risk Decoder
Introducing the Insurability Score: Your Insurance Risk Decoder
Oct 24, 2017

Today, The Zebra debuted the Insurability Score™, a personalized calculation which reveals to drivers what is affecting their insurance risk,...

6 Things to Know Before You Get Car Insurance
6 Things to Know Before You Get Car Insurance
Oct 04, 2017

Let’s get one thing out there. No one is especially psyched to get car insurance. You get it because it’s...

Editorial: A Need for Optionality in Insurance
Editorial: A Need for Optionality in Insurance
Sep 19, 2017

Today The Zebra announced that we closed a record-breaking $40 million Series B funding round, led by Accel Partners. As...

Car Warranty vs. Insurance: Which You Need and When
Car Warranty vs. Insurance: Which You Need and When
Sep 07, 2017

Anyone who has ever owned a “lemon” (a car that’s a dud) knows how stressful and costly car repairs can...

Religious Exemptions for Car Insurance: Are They Legal?
Religious Exemptions for Car Insurance: Are They Legal?
Aug 09, 2017

In nearly every conceivable scenario, if you’re driving around in a motor vehicle, there is no reason why you should...

Does Your Car Insurance Policy Cover Flooding?
Does Your Car Insurance Policy Cover Flooding?
Aug 07, 2017

If you don’t live in a flood plain, making sure your car insurance covers flood damage might be low on...

Can Your Bank Force You to Get Car Insurance?
Can Your Bank Force You to Get Car Insurance?
Aug 03, 2017

Wells Fargo is now finding themselves in hot water over the recent reports that they charged over 570,000 customers for...

How to Update Your Driver’s License When You Move to a New State
How to Update Your Driver’s License When You Move to a New State
Jul 28, 2017

Moving to a new state can be an exciting adventure. As with most moves, it requires a bit of paperwork...

When Can You Let Your Friend Drive Your Car (and When Shouldn’t You)?
When Can You Let Your Friend Drive Your Car (and When Shouldn’t You)?
Jul 26, 2017

It’s not uncommon for your friend to share your clothes, your skillet, or your favorite movie. And for those types...

Does Your Credit Score Affect Your Car Insurance Rate?
Does Your Credit Score Affect Your Car Insurance Rate?
Jul 19, 2017

You know you need good credit to take out a loan, a mortgage, or your friend with expensive taste. But...

What Are Your Options When Your Car Lease Ends?
What Are Your Options When Your Car Lease Ends?
Jul 17, 2017

Of course there are many reasons you might want to lease your car. Perhaps you like the idea of driving...

How Do Car Insurance Companies Determine Rates?
How Do Car Insurance Companies Determine Rates?
Jun 15, 2017

If you’re one of the 250 million drivers in the United States, you’re required by law to have car insurance....

CLUE Report: Why Does it Matter for Your Home and Auto Insurance?
CLUE Report: Why Does it Matter for Your Home and Auto Insurance?
Jun 06, 2017

When searching for an insurance policy, it’s important for consumers to do their due diligence and compare quotes before choosing...

Car Insurance for Seniors
Car Insurance for Seniors
May 26, 2017

Some senior stats for you: By 2030, one in five Americans will be over 65. The first of the baby...

Digital Insurance Cards: Which States Accept Them?
Digital Insurance Cards: Which States Accept Them?
May 19, 2017

You probably already take care of your banking errands on your phone (thanks, mobile check deposits!). You may have shown...

6 Reasons to Leave Your Car Insurance Company
6 Reasons to Leave Your Car Insurance Company
May 05, 2017

You might be familiar with a few scenarios that could make your auto insurance rates change: You bought a new...

5 Tips to Consider Before Financing Your Car
5 Tips to Consider Before Financing Your Car
Apr 21, 2017

Buying a new (or new-to-you) car can be an overwhelming process. First, you need to research all your options to...

7 Car Rental Mistakes That Could Cost You
7 Car Rental Mistakes That Could Cost You
Apr 11, 2017

Rental cars offer tremendous convenience. Whether you need a vehicle to help you explore a vacation destination or get you...

Car Insurance for First-Time Drivers: 6 Things You Should Know
Car Insurance for First-Time Drivers: 6 Things You Should Know
Apr 03, 2017

A driver’s license is more than just permission to take to the open road. To many, including first-time drivers, it...