Last Updated on November 13, 2025 by a2z_admin
If you are leasing a car, you might wonder how much more insurance costs on a leased car compared to one you own. The short answer is that insurance for a leased car costs about 15% to 25% more on average. That’s because leasing companies require higher coverage levels to protect their financial interest in the vehicle.
For example, if you own your car, you can choose liability-only insurance, but when you lease, the lender usually requires full coverage including collision, comprehensive, and gap insurance. These added protections increase the total cost, but they also ensure the car is fully covered if damaged, stolen, or totaled before the lease ends.
Across the United States, the average annual insurance cost for a leased car is around $1,900, compared to about $1,550 for a financed or owned car. That means you may pay about $30 to $40 more per month for the extra coverage required by your lease agreement.
The exact amount depends on your state, credit score, driving history, and the make and model of the car. For example, leasing a luxury car like a BMW or Tesla costs much more to insure than a Honda or Toyota.
In this guide, we’ll explain what makes leased car insurance more expensive, what coverage is required, average costs by company and state, and how you can lower your premiums while still meeting your lease terms.
Let’s start by understanding what kind of insurance a leased vehicle needs and why it costs more.
Why Insurance Costs More on a Leased Car
Insurance on a leased vehicle costs more mainly because the leasing company owns the car, not you. They want to make sure their property is protected until the lease is over.
Here’s what makes leased car insurance more expensive:
- Full Coverage Requirement: Lenders require collision and comprehensive insurance, even if you’d skip it on a car you own.
- Higher Liability Limits: Many leases require liability limits of 100/300/50 (meaning $100,000 bodily injury per person, $300,000 per accident, and $50,000 property damage).
- Gap Insurance Requirement: Covers the difference between the car’s market value and what you owe on your lease if it’s totaled.
Luxury Car Leases: Many leased vehicles are new or high-end, which naturally cost more to insure.
Utah Minimum Car Insurance Requirements
Before comparing rates, it’s important to know Utah’s minimum car insurance limits, as required by state law.
Utah is a no-fault state, which means each driver’s insurance pays for their injuries regardless of who caused the accident.
| Type of Coverage | Minimum Requirement |
| Bodily Injury Liability | $25,000 per person / $65,000 per accident |
| Property Damage Liability | $15,000 per accident |
| Personal Injury Protection (PIP) | $3,000 minimum |
| Uninsured Motorist (Optional but recommended) | Matching liability limits |
You can read more about no-fault car insurance on our No-Fault Car Insurance Guide to understand how Utah’s system affects your premiums.
Average Cost of Insurance for a Leased Car
Below is a national average comparison between leased and owned vehicles for 2025.
| Coverage Type | Owned Car (Annual) | Leased Car (Annual) | Difference |
| Minimum Coverage | $720 | Not allowed for lease | N/A |
| Full Coverage | $1,550 | $1,900 | +23% |
| Monthly Average | $129 | $158 | +$29 |
As you can see, the increase usually ranges between $300 to $400 per year, depending on your provider and vehicle type.
For high-value vehicles like BMW, Mercedes, or Tesla, the yearly insurance for a lease can exceed $2,500 to $3,000 due to their higher repair costs.
Required Insurance Coverage for a Leased Car
When you lease a car, the finance company requires specific types of coverage:
| Type of Coverage | What It Covers | Typical Requirement |
| Liability Coverage | Covers damage or injuries you cause to others | $100,000/$300,000/$50,000 minimum |
| Collision Coverage | Covers your leased car after an accident | Required |
| Comprehensive Coverage | Covers theft, vandalism, and natural disasters | Required |
| Gap Insurance | Pays the difference if the car is totaled | Often required |
| Uninsured/Underinsured Motorist | Protects you if the other driver has no insurance | Recommended |
Leased Car Insurance vs Owned Car Insurance
The key difference between leasing and owning a car is flexibility. If you own your car, you decide how much coverage you want. Leasing companies, however, make that decision for you.
| Category | Leased Car | Owned Car |
| Coverage Type | Full coverage with gap insurance | Minimum or full coverage |
| Who Owns the Car | Leasing company | You |
| Required by Law | Yes | Yes |
| Required by Lender | Yes (stricter limits) | Optional |
| Average Monthly Cost | $150–$170 | $120–$140 |
| Flexibility | Limited | High |
If you own your vehicle outright, you can reduce costs by dropping optional coverages. But with a lease, you must maintain full protection until the term ends.
Average Cost by Top Insurance Companies
Here’s how much leased car insurance costs across some popular providers in the U.S.:
| Insurance Company | Average Annual Cost (Leased) | Average Annual Cost (Owned) | Difference |
| State Farm | $1,720 | $1,480 | +$240 |
| GEICO | $1,680 | $1,420 | +$260 |
| Progressive | $1,940 | $1,600 | +$340 |
| Allstate | $2,020 | $1,730 | +$290 |
| Nationwide | $1,850 | $1,550 | +$300 |
| USAA | $1,560 | $1,320 | +$240 |
Does Every Lease Require Gap Insurance
Almost all leasing companies require gap insurance, and for good reason. Cars depreciate fast often 15% to 25% in the first year. If your leased car is totaled, your standard policy only covers its current value, not what you still owe on your lease.
For example:
- You owe $25,000 on your lease.
- The car’s market value after an accident is $21,000.
- Your insurer pays $21,000, leaving you with a $4,000 gap.
Gap insurance covers that $4,000 so you don’t pay it out of pocket. Many leases include it automatically, but if not, you can buy it for around $5 to $10 per month.
Factors That Affect Leased Car Insurance Costs
Several factors determine how much more you pay to insure a leased vehicle:
- Car Value: Expensive vehicles cost more to replace.
- Lease Terms: A shorter lease might require higher coverage.
- Credit Score: Insurers may charge higher premiums for low credit.
- Driving Record: Accidents or tickets increase risk-based pricing.
- Location: Urban drivers in cities like Los Angeles or New York pay more.
- Mileage: High annual mileage can raise premiums.
- Coverage Limits: Higher limits mean more protection but also higher cost.
If you live in a state with higher average rates, like California or New York, leased car insurance can cost 20–30% more than in states like Ohio or Utah.
Ways to Lower Insurance Costs on a Leased Car
Even though leased car insurance is more expensive, there are several ways to reduce costs:
- Shop Around: Compare rates from multiple insurers through AtoZInsurances.com.
- Bundle Policies: Combine home and auto policies for 10–20% savings.
- Maintain a Clean Record: Avoid tickets and at-fault accidents.
- Use Telematics Programs: Track your driving habits for discounts.
- Increase Deductibles: A higher deductible can lower monthly payments.
- Ask About Lease-Specific Discounts: Some companies offer deals for leased cars.
- Drive Less: If your lease allows, reduce mileage to save.
Leased Car Insurance by State (2025 Estimates)
| State | Average Annual Cost (Leased Car) | Average Annual Cost (Owned Car) |
| California | $2,450 | $2,000 |
| Texas | $2,020 | $1,700 |
| Florida | $2,320 | $1,950 |
| New York | $2,380 | $2,000 |
| Ohio | $1,460 | $1,200 |
| Utah | $1,780 | $1,400 |
| Illinois | $1,840 | $1,520 |
| Arizona | $1,920 | $1,580 |
The difference varies by state. High-traffic or high-claim states like California and Florida tend to have the biggest gap between leased and owned vehicle rates.
Pros and Cons of Leasing vs Owning (Insurance Perspective)
| Factor | Leasing | Owning |
| Insurance Cost | Higher | Lower |
| Flexibility | Limited | Full |
| Coverage Requirement | Strict | Optional |
| Gap Insurance | Often required | Optional |
| Customization | Not allowed | Allowed |
| Vehicle Ownership | Lender | You |
If your goal is to minimize long-term costs, buying and keeping your car for several years can save thousands on insurance alone.
Do You Need Full Coverage for a Leased Car
Yes. Every leased car must have full coverage, which includes:
- Liability insurance to meet state requirements.
- Comprehensive insurance for theft, fire, or natural disasters.
- Collision insurance for accidents involving other cars or objects.
- Gap insurance for loan or lease protection.
You can read about these in detail on our Comprehensive Car Insurance and Collision Car Insurance pages.
FAQs About Insurance on Leased Cars
On average, it costs 15–25% more than for an owned vehicle, or about $30–$40 extra per month.
Because they own the vehicle and want to protect it from any loss or damage until the lease ends.
Yes, but it must meet the leasing company’s minimum coverage requirements.
In most cases, yes. It protects you from paying the difference between the car’s value and your lease balance after a total loss.
Compare quotes, maintain a clean record, and ask for bundling or telematics discounts.
Conclusion
Insurance for a leased car costs more than for a car you own because of the additional coverage required by leasing companies. The average cost increase is around 20% per year, mainly due to the inclusion of collision, comprehensive, and gap insurance.
While that adds to your monthly payments, it also gives you full financial protection. If your car is damaged, stolen, or totaled, you won’t have to pay out of pocket for most losses.
Before signing a lease, always compare insurance quotes and understand your coverage requirements. Trusted comparison sites like AtoZInsurances make it simple to compare free quotes from top providers in the USA and find the best policy that fits your lease and budget.
