Leasing a car has its perks. You get to enjoy a new or nearly new vehicle without committing to long-term ownership, and the monthly payments are often more budget-friendly than buying. But while leasing might seem like the simpler option, there’s one area that can get a little tricky: insurance. When you lease, the car isn’t technically yours, which means insurance requirements look a bit different than they do for purchasing. To make the most of your lease and avoid any unpleasant surprises, it’s crucial to evaluate your insurance options carefully. Whether you’re leasing a shiny new model or a reliable used car, here’s what you need to know.

Start with the Lease Agreement

Your lease agreement is the ultimate guide to understanding your insurance obligations. Most lease contracts come with strict requirements that go beyond standard state minimum insurance coverage. Since the leasing company retains ownership of the car, they’ll want to ensure it’s fully protected against potential damage or loss.

Typically, lease agreements require both collision and comprehensive coverage in addition to liability insurance. Collision insurance covers repairs for damage caused by an accident, even if you’re at fault. Comprehensive insurance takes care of non-collision events like theft, vandalism, or weather-related damage. These coverages provide the leasing company with peace of mind, knowing their car is safeguarded.

When evaluating your options, check your lease agreement for minimum required coverage limits. For example, you might be required to carry liability coverage of at least $100,000 per accident or $300,000 for bodily injury. Make sure any policy you’re considering meets or exceeds these thresholds to avoid violating the terms of your lease.

Compare Costs Based on Coverage Levels

Insurance for leased cars tends to be more expensive than coverage for a car you own outright. This is because higher coverage limits and optional add-ons are often required. To find the best deal, you’ll need to weigh your options. Start by requesting quotes from multiple insurance providers and comparing how each policy stacks up when it comes to coverage levels and price. Just keep in mind that the cheapest option isn’t always the best.

Instead of focusing solely on cost, consider the value you’re getting. A slightly more expensive policy from a reliable insurer might be worth it for better claims service or additional perks, like free roadside assistance. Likewise, look for policies that allow flexibility if your lease spans several years. Some providers offer discounts for bundling multiple types of insurance, which could help offset the higher premiums associated with leased vehicles.

Consider Gap Insurance

Gap insurance can be a lifesaver for anyone leasing a car. It’s designed to cover the “gap” between what you owe on your lease and the car’s actual cash value (ACV) if it’s totaled or stolen. Since new cars depreciate quickly, particularly in the first year, traditional policies often leave drivers responsible for the financial shortfall.

Imagine this scenario: you’re involved in an accident, and your car is deemed a total loss. The leasing company expects you to pay the remaining balance on the lease, but your insurance payout only covers the car’s ACV, which may be much lower than the lease balance. Gap insurance steps in to bridge that difference, ensuring you’re not left paying out of pocket.

Many leasing companies include gap insurance as part of the lease, but it’s not always a guarantee. Make sure to confirm whether it’s already included or if you need to purchase it separately. If you do need to buy it, this type of coverage is often affordable and can save you from a major financial headache down the line.

Think About Mileage and Use

While leasing comes with benefits, it also places limitations on how you use the car. Most lease agreements include mileage caps, which means your insurance policy should reflect your driving habits. If you don’t drive much, you may be eligible for low-mileage discounts with some insurers. This can help balance the overall cost of coverage, especially since leased cars typically require higher limits.

On the flip side, if you’re someone who expects to push those mileage limits, ensure your policy accounts for the potential wear and tear. Since excessive mileage can impact the car’s value, you’ll want an insurance plan that offers robust protections, such as coverage for accidental damage.

Check Provider Reputation

Finally, don’t forget to assess the insurance company itself. Leasing a car comes with long-term responsibilities, and you’ll need an insurer who’s reliable and easy to work with. Look for providers with solid reputations for customer service, straightforward claims processes, and responsive communication.

Reading reviews from other lessees can give you insight into how well certain companies meet the unique needs of people leasing cars. From claims approvals to billing transparency, these firsthand accounts can help you choose a provider that aligns with your expectations.

Evaluating insurance options when leasing might feel overwhelming, but by taking the time to review your agreement, compare policies, and consider your specific needs, you’ll be well-prepared to hit the road with confidence.