Yes, you absolutely must insure a leased car. It is not optional. When you lease a vehicle, you do not own it; the leasing company (the lessor) retains ownership. To protect their asset, they legally require you to carry a specific and often more robust auto insurance policy than the state minimums. Driving without the required insurance is a violation of your lease agreement and can lead to the leasing company purchasing very expensive "forced-placed" insurance on your behalf and billing you for it, or even repossessing the vehicle.
The leasing company's requirements are non-negotiable. They will mandate that you carry both liability insurance and full coverage, which includes comprehensive and collision coverage. Furthermore, they require specific, high coverage limits. While your state might only require $25,000 in bodily injury liability per person, a leasing company will typically require $100,000 per person and $300,000 per accident. They also set high requirements for property damage liability and often specify a low deductible for your comprehensive and collision coverage, such as $500 or $1,000, to minimize their financial risk.
A critical component for leased cars is gap insurance. If the car is totaled or stolen, your standard insurance will pay the vehicle's actual cash value, which depreciates quickly. The lease payoff amount might be higher than this value, leaving you with a "gap" in coverage. Gap insurance covers this difference. While you can often buy it from the leasing company, it's frequently cheaper to add it to your own auto insurance policy.
| Insurance Requirement | Typical State Minimum (Example) | Typical Leasing Company Requirement |
|---|
| Bodily Injury Liability (per person) | $25,000 | $100,000 |
| Bodily Injury Liability (per accident) | $50,000 | $300,000 |
| Property Damage Liability | $10,000 | $50,000 - $100,000 |
| Comprehensive & Collision | Not Required | Required |
| Comprehensive/Collision Deductible | N/A | $500 - $1,000 |
| Gap Insurance | Not Required | Highly Recommended/Often Required |
Before you sign a lease, carefully review the insurance section of the contract and get a quote from your insurer to ensure you can meet the terms. It's a significant and mandatory cost of leasing.
