Six Things You Should Know About a Car Lease & Insurance

New Range Rover For Lease!Who doesn’t love driving a brand new car? The new car smell alone is enough for me to want to buy a new one! Leasing a car is a good option if you want to preserve your cash. With interest rates so low, leasing has becoming a more popular thing to do.

Another great thing about leasing a vehicle is that once the lease is over, you can just hand over the keys to your dealer, minus any overages. It is sometimes a big pain to sell your car once you’re done with it.

Below are six things you should know about a car lease and car insurance. The name of the game is to save money by getting the best lease and cheapest insurance possible.

Facts About Insurance For Leased Cars

Leasing a car is a convenient way to get more car for less money. But that doesn’t mean you can skimp on auto insurance – in fact, a lease may require you to buy more even coverage. Since the leasing company owns the vehicle, it wants to protect its investment in case you’re in an accident or your car is stolen.

Before you lease your next car, here are a few things to know about car insurance for leased cars.

1. Coverage is mandatory

Before you drive off the lot in your new car, make sure you’re covered. If you don’t already have car lease insurance to transfer to the new vehicle, you’ll need to buy it before you leave the dealership or leasing office. Most states require some minimum level of liability insurance, and your leasing company may require more than state-minimum levels. Find out more with our Auto Insurance Coverage Guide.

2. Your limits may be higher

Leasing companies often require high liability insurance limits for your leased car. Some may require you carry a lower deductible too, or make you put money in reserve for the duration of the lease if your deductible is higher.

3. Collision and comprehensive may be required

In addition to the basic liability insurance for leased cars that is mandated by most states, you may be required to carry collision or comprehensive car insurance, too. Collision insurance pays for damage to your vehicle if you hit someone’s car, another vehicle hits you or your vehicle rolls over, regardless of who is at fault. Comprehensive coverage helps pay for damage to your vehicle from events other than a car accident, like theft, vandalism, and certain natural disasters.

4. You’ll need to pay for original replacement parts

Some leasing companies stipulate in the lease agreement that if any repairs are made as a result of a comprehensive or collision claim, you must use only Original Equipment Manufacturer (OEM) parts, which are often more expensive than after-market parts. Fortunately, there is a low-cost option available with most car lease insurance policies that covers the difference between the cost of factory parts and generic parts.

5. Gap insurance can protect you

Gap insurance provides extra protection in addition to your basic car insurance for leased cars. If your leased vehicle is stolen or totaled in an accident, this optional coverage fills in the gap between the lease amount still due on the vehicle and what your insurance company would pay for a regular collision or comprehensive claim. Learn more about gap coverage and how it could protect you.

6. There are still ways to save on your car insurance

If you insure multiple vehicles with the same company, or if you bundle your car and homeowner’s insurance, you may qualify for substantial discounts on automobile insurance. If your driving record is clean of any accidents, or if your new vehicle comes equipped with an anti-theft device or passenger restraint system, you could save even more depending on where you live and on your insurer.


Earn Up To A $300 Bonus By Driving With Uber. Driving for Uber is a great way to make extra money when you want. I average $33/hour, and 20 hours a week. An extra $2,400+ a month in my pocket is fantastic spending money while having zero boss. Uber is giving up to a $300 bonus after giving your 20th ride for signing up. Sign up to be a driver today and work when you want if you want to make some extra cash.

Lower Your Auto Insurance Costs: Check out Esurance online. They have some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. Esurance has good driver discounts, and multi-product discounts as well.

Save Up To 30% On Car Maintenance: YourMechanic is an incredible new service that employs some of the best automechanics to go to your home or office to take care of your maintenance needs! You no longer have to drive to a repair shop, wait around for hours, and get the hard sell to pay for more things to fix. Because the overhead costs are so much lower, YourMechanic passes on the savings to you while also saving you lots of time. Not only that, they have a 12-month, 12,000 mile guarantee.

Updated for 2016 and beyond

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

You can sign up to receive his articles via email or by RSS. Sam also sends out a private quarterly newsletter with information on where he's investing his money and more sensitive information.

Subscribe To Private Newsletter


  1. says

    i have never leased a car. i haven’t done a lease vs buy analysis in a while, and am curious what your or anyone else’s thoughts on it are today? it used to not make sense for me to lease, but car prices have changed significantly since i last revisited. your thoughts?

    as far as expenses, i would think additional dings and dongs to the vehicle.

    • says

      Leasing a car is for the rich. Leasing costs the most, and takes the least time to sell b/c you just hand back the keys. The rich don’t have time for the negotiation process of re-selling.

      Nobody should lease, unless they are making at least 20X the value of the car annually imo. Then, it’s like who cares if you lose several thousand bucks.

      • says

        Leasing is great if your are like me who gets bored of driving the same car for more than a couple of years. Especially on higher end cars like BMW and Mercedes where the cost of fixing and maintaining the vehicle is high, the vehicle is under warranty for the time I drive it and especially in the case of BMW the oil changes and maintenance is free.

        If you do lease just make sure you do research so you don’t get screwed by the dealer. Know what the Cap cost is, the residue for your particular model, and the money factor. Check KKB and research how many cars in your area sold at what price so you know how
        low to shoot for when negotiating the cap cost.

        One thing I recommend is always taking the tire insurance when you lease. The wear and tear insurance is not so important provided you are careful with your new car. I think the tire insurance is a must if you drive a lot. It adds 20-30 dollars on your monthly paymentt but its definitely worth it if u get a nail or a flat.

        I have already had to change two tires on my car and its only the end of the first year of my lease. A run flat tire on a Bmw costs 300-400 each, but I had the replacements for free because of the insurance.

      • Rob says

        Just the opposite. The rich can afford to buy cars and pay cash. Leasing makes practical sense for those who don’t have time for car repairs and the maintenance worries associated with aging cars. It is also for people who cannot afford to relinquish tens of thousands of dollars worth of cash all at once.

  2. says

    The lease payment may be lower, however it is a very expensive way to have a car. It is very similar to renting. You pay a premium to not owning it. The least expensive way to acquire a car is to pay cash. At the end of a lease you generally have no equity, but you paid for all the depreciation during the term as well as interest at usually a higher rate.

  3. says

    I didn’t realize that insurance was required for leasing. It’s not something I’ve considered but it looks like it’s not a bad idea. This might lead me to look into some leasing options for the future as our current car is in need of replacing.

  4. Tracey says

    What if I don’t get the required insurance? What will happen? (I have insurance, just not at the super high levels the lease requires)

  5. Kim says

    Leasing isn’t for everyone, but it has been good for me. I’m currently saving up to buy a used car after this lease (my 3rd one) but the payments are much lower than purchasing and it has been a nice way to build up my credit. When I first started leasing I did so because I could afford either car payments or repairs but not really both and needed something that could drive in the mountains (I live in Colorado). The roads I drive on have fatal accidents somewhat regularly and I’ve now learned that it REALLY matters what you drive. My last (leased) car saved my a$$ more than once when driving safely wasn’t enough.

    In addition, if you’re working 60 hours a week and use your car to get to jobs then having reliable transportation is a must. Plus, honestly, I grew up in poverty and it’s nice to have one nice thing that isn’t broken.

    I don’t know about other dealerships, but mine allows me to use the money I’ve paid into the lease towards buying the car OR towards buying/leasing a different car. If I want to change dealerships then mileage and dings matter but I turned in my last car with a huge dent in it, dirty, missing stuff, and they didn’t charge me for anything. I’m being careful with this one though, so that I have the option of changing dealerships if I want to without paying anything.

    Like I said, it’s not for everyone, but it was/is for me, and gives me wiggle room to save up to purchase a car.

    • says

      Thanks for sharing your thoughts Kim. As I’ve grown older, I’ve come to cherish the idea of leasing more as I no longer have the patience or the time to buy and sell my cars on Craigslist. Leasing allows one to just turn in the keys, which is great! I still drive a 14 year old car now, but I’m considering putting a lease on my company.

  6. Ray says

    My car lease ends at the end of October. We are going to return the car, with around 4,000 miles under what we paid for. Small dent on back rear tire well. Looks like residual may be around $500 higher than estimated value. My question: what do we need to do to spend the least amount of money to give this car back, and to lose the least amount of money? Thanks!

  7. says

    Hi Admin

    I need a little Help/Guidance as i guess you have some great experience/expert in this field..

    I have a friend who is 25 and lives in New Orleans. He currently pays $240 a month with Allstate for MINIMUM coverage car insurance.

    He has previously tried to find better rates, without success. He is financially burdened by this bullshit, and Louisiana has some of the highest car insurance rates in the country. Currently Driving a Cheap fuel efficient 2003 corolla.

    Anyways, he wants to start searching again for cheaper insurance, but don’t know where to start, looking for any advice on this.

    He is also considering more drastic options like trying to get a rate for somewhere He doesnt live (for example, many people who move to new orleans keep their insurance in their old home state and save TONS)like his friend who moved here from OK, and pays 1/3 what he probably would here.

    Any help is appreciated, all his money is just going down the drain and has for the 6 years since he has been driving.


  8. says

    I have leased around 15 cars in my lifetime and have never once regretted it. I especially appreciate the reliability and satisfaction of driving a new car every three years. I think it makes sense for a lot of reasons. Monthly Car Lease gives you some good info and a starting place for negotiating the lease with your dealer.

Leave a Reply

Your email address will not be published. Required fields are marked *