Last Updated on January 29, 2026

Maybe your car has broken down at the worst possible time. Maybe you’re relocating for a few months, traveling, or just not ready to buy a vehicle yet and need a temporary ride. In situations like these, leasing can feel like the perfect “middle ground” between owning and renting.

But one common surprise catches new lessees off guard: leasing doesn’t automatically mean insurance is handled for you. In most cases, you still have to buy your own auto insurance—and your lease agreement will usually spell out exactly what coverage you’re required to carry.

If you’re insuring a leased car right now, use this guide to understand what coverage you’ll likely need, why requirements can be stricter than state minimums, and what to do at the end of the lease.

Key Takeaways

1. You Usually Need Your Own Policy: Most leased vehicles do not “come with insurance,” so you’ll need to buy coverage that meets both state law and your lease contract.
2. Expect Full Coverage Requirements: Leasing companies typically require liability plus collision and comprehensive, and they may also set minimum limits and maximum deductibles.
3. Gap Coverage Matters on Leases: Many leases include a gap waiver, but not all do—confirm what your contract provides before assuming you’re protected after a total loss.
4. Avoid Lapses at All Costs: If your policy cancels or lapses, the lessor may force-place coverage and bill you—often at a much higher cost than normal insurance.

Do Leased Cars Come With Insurance?

Usually, no. Your monthly lease payment typically covers the vehicle’s depreciation, financing charges, and fees—not a complete auto insurance policy. That means you’ll generally need to start (or update) your own insurance before you can drive off the lot.

Your leasing company may also require it to be listed on your policy as the lienholder (or as an additional insured/loss payee). This ensures the company gets notified if coverage is canceled and can be paid appropriately if the vehicle is totaled.

How Much Does Car Insurance Cost for a Leased Vehicle?

Leasing doesn’t automatically make your insurance “expensive,” but it often requires you to carry more protection than a bare-minimum policy. That’s why leased-car insurance often costs more than minimum-liability coverage—and why some drivers find leased car insurance isn’t always cheaper.

Your actual price depends on your driving record, credit (where allowed), ZIP code, the vehicle you lease, and the coverage limits and deductibles your lease requires. If you want a realistic number, the fastest approach is to compare quotes using the exact requirements listed in your lease contract.

Leased Car Insurance Requirements

Most leasing companies require what people casually call “full coverage”: liability plus physical-damage coverage (collision and comprehensive). Some lessors also require higher liability limits than your state minimums, and many cap how high your deductibles can be.

When you carry liability + collision + comprehensive together, you’ll often hear it called full coverage auto insurance. Just keep in mind that “full coverage” isn’t a legal term—your lease agreement is what defines what you must carry.

What Coverage Does Your State Require?

Even if your leasing company requires more, you must still meet your state’s legal minimums. You can review the rules where you live using this state-by-state auto insurance requirements guide, along with what counts as minimum coverage.

In nearly every state, drivers must carry liability insurance. New Hampshire is the main exception (though drivers still have financial responsibility obligations). Even in states with low minimum limits, your leasing company may require you to increase your liability limits beyond the state minimum.

Some states also require medical coverage under “no-fault” rules, which can impact price (here’s why insurance can be more expensive in a no-fault state). To understand the concept, read how no-fault auto insurance works.

The states commonly associated with no-fault rules include Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota, and Utah. Requirements can vary by state and can change over time, so always verify your state’s current rules and your lease contract’s requirements.

Gap Insurance for Leased Cars

Gap insurance is designed to help when your vehicle is totaled and the insurance company pays only the vehicle’s current market value, which may be less than what’s owed under the lease. That payout is usually based on actual cash value (ACV).

If your car is declared a total loss, gap coverage can be the difference between walking away clean and having to pay a large remaining balance out of pocket.

Many leases include some form of gap coverage as a waiver, but not all do—and coverage details vary. If you’re unsure, ask the dealer/leasing company for the exact wording and verify what your insurer offers. It can also help to compare insurers (here’s a handy list of car insurance companies if you’re shopping).

Who Pays for Insurance on a Leased Car?

In most consumer leases, you (the driver/lessee) pay the insurance premium directly to your insurance company. The leasing company typically doesn’t pay your monthly premium for you.

What the leasing company can do is enforce the contract. If your policy cancels or you don’t carry the required coverage, some lessors can buy their own protection (sometimes called force-placed coverage) and bill you—often at a much higher price than you’d pay on your own.

How to Insure a Leased Vehicle

Use this checklist to set up your leased car insurance the right way:

1. Read your lease agreement’s insurance section. Look for required liability limits, required coverages, and any maximum deductible allowed for collision/comprehensive.
2. Get quotes using those exact requirements. If you quote lower limits and then have to increase them later, the price you saw “online” can change.
3. Add the leasing company correctly on the policy. Your insurer may need the lessor’s legal name and address, plus your lease account number, to list them properly.
4. Choose deductibles you can afford (and that meet the lease rules). A higher deductible can lower your premium, but you’ll pay more out of pocket after a claim.
5. Send proof of insurance to the lessor. Many lessors require an insurance ID card or declarations page on file.
6. Review the policy at every renewal. Make sure a renewal didn’t accidentally change coverage, deductibles, or the lessor listing.

What Happens If Your Insurance Lapses on a Leased Car?

A lapse can be a big deal on a lease. At best, you may have to reinstate coverage immediately and provide proof. At worst, you could face expensive force-placed coverage, contract penalties, and higher premiums later. If you want a deeper breakdown, read what happens if your car insurance lapses.

What to Do When Your Lease Ends

When your lease is ending, your next move determines what you should do with your insurance:

1. Extending the lease: Your insurance usually stays in place, and many policies renew automatically—but verify nothing changed and the lessor is still listed correctly.
2. Buying the vehicle (lease buyout): If you own the car outright, you may be able to adjust coverage. If you’re still financing, you’ll likely need to keep physical damage coverage; here’s when it makes sense to drop collision and comprehensive (and when it doesn’t).
3. Trading it in for another car: Update your policy for the new vehicle, or consider whether it’s time to switch auto insurance companies if your rates jump.
4. Returning the car and not replacing it right away: You may be able to cancel your policy—but do it carefully to avoid fees, registration issues, or an unnecessary coverage gap. Here’s how to cancel auto insurance the right way.

FAQs About Car Insurance for Leased Vehicles