Car lease insurance can be extremely expensive, particularly when compared to when you purchase a car.
Lease Insurance Coverage
In many cases, if you lease a car you will be required to carry maximum coverage. This translates into not only legally-required liability coverage, but also comprehensive and collision coverage, often with a zero deductible. This can be highly expensive, even for individuals over the age of 30 who have good driving records and live in a geographical area that has typically low auto insurance rates.
Another requirement may be to have gap insurance, which covers not only the cost of the lease, but the difference between the lease and the cost of the car in case the car is totaled in an accident. While not every lease requires gap insurance, it is recommended because if the car is totaled, the leaseholder is still required to pay for the entire cost of the car to the car manufacturer or leasing company.
Purchase Insurance Coverage
By comparison, insurance coverage requirements for a car purchase are often much less stringent and less expensive. The finance company may have specific requirements for insurance coverage, including liability, collision and comprehensive, but they rarely require that the deductible be zero, which really drives the insurance cost sky high.
Also, gap insurance is recommended for almost any new car purchase. However, after a few years when the value of the car has depreciated, it is possible to either drop this coverage or at lease decrease it since in a car purchase, the monthly payments are going in part to the principal amount of the loan.
Insurance coverage for a leased car can be very expensive and should be included in any estimate of expenses when considering leasing a car.