When leasing, determining the repair and warranty costs may be puzzling for consumers. It is the cheapest way of ownership so you should understand the insurance aspect. Does car leasing come with insurance at the beginning of a lease? Keep scrolling and check the answer.

Key points

  • At the beginning of your lease term, you get a new car with a manufacturer’s warranty. It lasts typically up to 5 years.
  • The factory warranty covers mechanical repairs. Commonly, it doesn’t include glass items, lights, belts, hoses, tires, and other wearable parts.
  • New York State’s policy requires drivers to carry bodily injury and property damage liability insurance. Most leasing companies will require an additional level of protection.
  • Bundling, paying upfront, or looking for special discounts can save your money.
  • A good rule is to shop around and negotiate for the best option for you.

Does car leasing come with insurance in the original car lease contract?

If you lease a new car, a coverage plan is provided by the original manufacturer of the car. The factory warranty will cover any mechanical repair, not due to accident, abuse, or normal wear and tear. 

Glass items, lights, belts, hoses, tires, and other wearable parts may not be covered by some manufacturers past an initial period. Each manufacturer sets its own criteria and you should carefully study your lease agreement.

Check whether the warranty expires before your lease ends.

Nearly all new cars come with at least a three-year, 36,000-mile bumper-to-bumper warranty.  

Usually, the factory warranty works for a period of time that often expires before the end of the lease term.

Once it expires, you are the one responsible for the state of your car. You will have to cover all repairs out of your pocket. 

front panel of a land rover defender car wih ropes on top

Will leasing a car affect the cost of insurance?

Yes. If something goes wrong, and especially if the car is totaled, your leasing agency wants to make sure that they don’t lose any money on this lease.

As a car owner, you may choose a policy with only the minimum coverage for your state. A leased car, however, will likely need a more comprehensive insurance policy to meet legal requirements as well as any lender’s coverage requirements.

Before you drive off the lot, the leasing company will require you to provide proof of certain levels of insurance coverage.

You will also need to list the leasing company as an additional interest and loss payee (meaning that they will get the payout for any damages to the vehicle).

What are the insurance rates for leased cars?

In fact, insurance rates for leased vehicles vary like insurance for any vehicle, based on various factors:

  • Credit score. Insurers tend to make an assumption according to your financial liability and credit history.
  • Driving history. If you’ve got many speeding tickets, an insurer has reason to think you may be a kind of risk.
  • Years of driving experience. Insurers will give a better rate to the experienced driver rather than a person who’s been on a road for a couple of years.
  • Where you live. Every state regulates insurance differently. You also might find that you’re paying more in a city where there’s a ton of traffic and more accidents than in a rural area.

Rates differ depending on many factors but you can use our car insurance calculator to get a better estimate of what to expect.

How to secure yourself?

In New York, drivers are required to carry bodily injury liability and property damage liability insurance. You should protect yourself and get an additional level of protection.

Some leasing companies may require additional coverages that go beyond what the state requires. Because you do not own the car, the leasing company wants to take extra steps to protect their asset.

Most leasing companies may also want you to have:

  • Collision coverage, which helps pay for the cost of repairs to your vehicle if it’s damaged by another car or object.
  • Comprehensive coverage to help protect your car if it’s stolen or damaged in an incident that’s not a collision, like fire, hail, wind, theft, vandalism or hitting a deer.
  • Gap insurance, which will protect you if your car is totaled by paying the remaining difference between the actual cash value of a car and the money you owe.

If you are leasing a new vehicle after returning your previous vehicle, your insurance will transfer. You will usually have a limited time to inform your insurance company of the change in vehicle details. This can be anywhere from a few days to a few weeks, depending on the state within which you reside.

Tip: Carefully check the fine print details or contact your insurance company. This may cause an increase in your monthly payment, although it may also result in no change.

How to Save Money on Car Insurance?

  • Bundling. Some companies can offer discounts when you bundle your auto policy with your home or renters insurance. See how you can save by bundling insurance policies.
  • Shop around. To get the cheapest and the best insurance for leased cars, you’ll need to check around and compare car insurance policies. Look for policies that also offer discounts, such as driving several years without an accident.
  • Telematics program. Some insurers use the devices you plug into your car, and if you’re a good driver, your insurer will see that. It’ll receive data that you don’t speed too much, and you don’t brake hard.
  • Pay upfront. Consider paying your policy upfront rather than monthly. That can be a challenge for many people, but it can often save you around 5% off a policy.

What should I do with my auto insurance after the lease ends?

There are the scenarios that may develop in case your lease ends:

  • Extending your car lease. In general you can just keep making your payments.
  • Getting a new leased vehicle. You need to let your insurer know and they’ll update everything, and you can watch your premiums go up or down. If they go up, of course, you may compare other companies. In other words, look for a new car insurance policy for your leased car.
  • Purchasing the leased car. This way your insurer needs to remove the leasing company from the insurance.
  • You’re no longer going to lease or own a car. You will have to cancel your insurance, or you may want to inquire about non-owners car insurance, which covers people who drive cars but don’t own them (ride-sharing services). Whatever you do at the end of your car’s lease, you’re going to be contacting your insurer.

If you are leasing a new vehicle after returning your previous vehicle, your insurance will transfer. You will usually have a limited window within which to inform your insurance company of the change in vehicle details.

Tip: Check te details in your fine print or contact the company for more details.

What are the other options?

There are other ways to secure your car besides car leasing with insurance. You should decide how rough you are on your car and for how long you are going to drive this vehicle. Remember, warranties don’t cover:

  • oil changes
  • brake jobs
  • tires
  • other “wear items” (meaning things that are subject to wear)

If you plan on keeping your car until the wheels fall off, you might consider buying an extended warranty to cover repairs in the car’s fifth and sixth year or longer. 

Some drivers can opt into buying an extended lease warranty to be secure for the whole duration of their lease term.

Keep in mind that sometimes the cost of repairs might exceed what you pay for the warranty.


Let’s say you decided to buy an extended warranty for about $1,500. Later, you wind up having a $500 repair. Ok, you cover it and that’s it, you lose your $1000 for the sake of being calm. There’s nothing wrong with a desire to be on the safe side but when it’s money matters it’s better to think twice.

When do you really need an extended car leasing insurance?

  • Coverage for parts and repairs the factory warranty doesn’t cover. An extended warranty allows you to know exactly what is covered and can easily save you money in the long run.
  • Get repairs at any licensed garage. A warranty from a third party lets you pick where the work is done so you can find an affordable shop that you trust for repairs and maintenance.
  • Trip interruption and roadside assistance. You can get roadside assistance in case you break down in another town or to protect yourself from a dead battery, lockouts, or running out of gas.

When doubting whether you need an extended warranty or not you may contact our lease experts who will make sure to give you all the needed information and give advice on what’s best for you! 

#enjoy your freedom with Grand Prix Motors!

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