How Much Insurance Do You Need to Lease a Car?

Leasing banks require its lessees to carry insurance coverage higher than the state minimums. Because the bank owns the leased vehicle and not the lessee, the bank requires increased limits to protect from loss or non-payment. Before you pursue a lease, consider the necessary coverage requirements and your overall cost.

Full-Coverage Insurance

Leasing banks require full-coverage insurance. This policy covers your car's market value in the event of a loss, even if you were at fault. If this is your first loan and you have only maintained a state liability policy in the past, you can expect to pay more for your car insurance. A liability policy only covers damages to other people or property, not damages to your vehicle. Check the cost of a full-coverage policy with your insurance provider so you can budget for the payment.

Limits

Required bodily injury and property damage limits vary by state. Your leasing bank likely requires you to carry more than the state-required amount and your payment will increase as a result. Ask your leasing bank or the lender you intend to use for the amount of coverage that it requires. Increased limits protect your liability in the event of a serious accident; your insurance coverage will pay for significant damages to other people so you don't have to.

Deductibles

A lender also requires a lower deductible. A deductible is the amount that you pay out for repairs if you make an at-fault claim. For example, if your vehicle requires $4,000 in repairs from an at-fault accident, your insurance company will pay for the repairs, but you must pay a portion of it, which is the deductible amount. Your insurance company may offer a deductible option that ranges from $0 to $1,000, although leasing banks often require a $500 deductible or less.

Gap Insurance

Gap insurance is an additional policy you can purchase from your leasing bank, insurance agent or a third-party provider. A full-coverage policy pays toward the vehicle's market value if it is a total loss, but you are responsible for making any payments due if the lease isn't paid off. Gap insurance covers the "gap" between your vehicle's value and lease amount. Most leasing companies require this coverage. Consider purchasing the policy anyway, even if your lender does not require it.