Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Sep 28, 2021

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Insurance Q&A: “Is insurance included when you lease a car?”

If the leasing company you’ve decided to go with is including car insurance as part of the lease agreement, don’t sign it!

Odds are the car insurance you’re being offered is simply an additional ‘convenience’ option provided by the car leasing company.

It is the same convenience that leads to the purchase of a $6 gallon of milk from the local gas station.

Or how about the convenience of the $14 cheeseburger you’re eating at the airport while reading this post, or the $7 per gallon gas for the convenience of not having to re-fill the gas tank when returning your rental car? Most places can charge that much because it’s touted as being ‘convenient’. Drivers may be quick to pay the price offered without giving it a second glance, but that means that they may be getting taken for a ride.

[Rental Car Insurance]

Are you picking up on what we’re getting at here?

Insurance for a leased vehicle can already be more expensive than if you purchase the car outright, so it’s best to shop around. Not only that, it’s incredibly smart to read the terms of the service being offered to you. That way, you’ll ensure your monthly payment isn’t through the roof all for the sake of convenience when you finance a vehicle.

Lease payments are already expensive enough without adding coverage to the mix. It’s best to look for auto insurance policies through an actual insurance company, rather than through the leasing company. Plus this way you know you’re not paying for unnecessary additional coverage options.

How can you utilize your options?

It is recommended you obtain insurance quotes online and/or visit a local independent insurance agent for multiple car insurance quotes prior to finalizing the lease on your new ride. This is the best way to ensure you get appropriate coverage for the most cost effective insurance premium.

Your agent can fax the proof of insurance over to the leasing company in real time and get you on your way, likely at half the cost of the leasing company’s insurance policy offerings. This way, the insurance company will be able to tell you what type of coverage you’ll need.

Most drivers will need the common types of protection like comprehensive coverage and collision coverage when leasing; if you’ve ever purchased a vehicle you know that these can sometimes be optional. However, with a lease, the company will want to protect their property, and some have minimum requirements regarding what sort of insurance you’ll need. If you’re working with your leasing company as well as an insurance company, they’ll be able to communicate and let you know what your insurance requirements will be.

Tip: Ask your insurance agent about their GAP coverage and new car replacement insurance options rather than purchasing that coverage from the leasing company. It is also likely much cheaper than the same coverage offered by the leasing company.

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What’s the bottom line?

The bottom line is simple: while insurance is offered when you lease a car, the cost of said insurance is going to be higher if you get it through the company providing the lease. Your best bet is going to be researching various auto policies offered by different companies, so that your monthly lease payment is kept in the affordable range. You’ll be able to sync them up with your lease options, and create the perfect, budget friendly service option.

By looking online, or speaking with an agent, you’ll be able to keep your premium cost lower than if you pay that ‘convenient’ coverage option offered by whichever company you sign your lease with. They may have some sort of minimum requirement when it comes to what types of coverage you’ll need on your vehicle, but that’s to be expected since they want to be financially safe.