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While leasing a car may not be the best choice for all individuals, it is a perfect solution for some. A leased vehicle can afford a driver the benefit of a high-end or luxury automobile with much more affordable payments than a purchase does since the vehicle reverts back to the lease company at the end of the lease unless the lessee decides to exercise an option to buy.

As with any vehicle purchase, though, a lease requires that the lessee secure auto insurance to protect the lease company as well as other drivers and pedestrians.

Insurance Requirements for Leased Vehicles

When you buy a car, your lender generally requires that you have a certain amount of collision and comprehensive coverage that protects the vehicle. However, they may allow you to have the state-required minimum coverage for bodily injury liability, personal injury and property damage liability. A lease company (lessor) will have certain insurance requirements for its lessees that may exceed the minimum insurance requirements of the state while also requiring both comprehensive and collision coverage. The lease company may also determine what the maximum deductible you may have is.

This creates less flexibility in adjusting premiums because the more risk you self-insure and take on through deductibles and lowered limits, the less expensive your insurance premium will be. When driving a leased vehicle, because the vehicle always belongs to the lessor, the lessee has little say in what their self-insurance capacity is because the lessor can only be assure of protection against losses when insurance coverage is secured.

Leases and Gap Insurance

One type of coverage that's required on a lease which isn't always required on a traditional vehicle purchase is gap insurance. Generally, if a vehicle is totaled during an accident, the insurance company will cover the actual value of the vehicle since that is the true cost of the loss suffered by the insured. Vehicles depreciate the moment they are driven off the lot, so the value of a totaled vehicle may be less than the car loan or lease amounts. In a lease situation, since the value that was lost goes to the lessor and does not clear out the lease agreement, gap insurance gives the lessor an additional amount that covers the difference between the amount in the lease agreements and the value of the total vehicle. Without gap insurance, a lessor could be responsible for making payments out of their own pocket after a total loss of the leased vehicle. Gap insurance can also include an additional amount for any down payments made.

Gap insurance isn't always a product that must be purchased separately. Some lessors include gap insurance payments within their lease agreements. If this is the case, you can always check with an insurance agent to find out if they can help you secure gap insurance for less.

Premium Pricing

As with any insurance purchase, there are many factors that will be evaluated when determining the cost of your Missouri auto insurance policy for a leased vehicle. Your age and driving history are two factors that will play a big role in determining your premiums. The insurance underwriters will review your motor vehicle history report in order to assess your risk based on historical driving and ticket patterns.

Your marital status will also help determine your rates. Statistics show that individuals who are married are less likely to drive recklessly and have insurable incidents than those who are unmarried.


As with any auto insurance policy, insurance on your leased vehicle will exclude damages caused by certain events such as:

  • Acts of war
  • A personally leased vehicle covered by personal auto insurance which is damaged while being used for business purposes
  • Government confiscation
  • Racing
  • Illegal activities

If you are trying to determine whether leasing or buying a new vehicle fits better in your budget, insurance expenses should be part of that equation. Give us a call at 800-530-5822 or stop by and we can help you determine the total cost of insurance for either course of action and help you decide which arrangement will work out better in the long run.

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