Car insurance when renting (2022)


If you’re looking for a new car, you might be thinking about leasing rather than buying. Leasing certainly has some advantages, but you should also be aware of the car insurance requirements that you will need to meet when leasing a vehicle. Depending on your leasing company, you will likely need to purchase additional coverage.

In this article, our Home Media review team will outline the insurance requirements that come with renting a new car. We’ll discuss the pros and cons of leasing versus buying a vehicle and cover the best car insurance companies to help you navigate the automotive coverage market.

The basics of renting a car

Leasing a new vehicle essentially consists of leasing it for a predetermined period. Most leases last between two and four years. You make monthly payments and then return or purchase the vehicle at the end of the lease term.

Car rental contracts come with annual mileage limits, which typically range from 12,000 to 15,000 miles. Exceeding these limits will result in additional charges at the end of the lease, or you may pay additional charges for higher limits during your lease period.

Advantages and disadvantages of renting a car

Leasing a new vehicle has advantages and disadvantages. Here are some things to consider when weighing buying a car versus leasing a car:

Car insurance for leased vehicles

Car insurance when renting has a few additional requirements, but it’s not radically different from the coverage you need when buying a new vehicle. You will need to meet your state’s minimum coverage limits as well as any requirements set by your leasing company.

Each state has its own minimum liability requirements for property damage and personal injury. These types of insurance pay for property damage and other people’s medical expenses when you are at-fault in an accident. Some leasing companies may require you to carry liability insurance that goes beyond state mandates, including coverage for uninsured and underinsured motorists.

Additional coverage for rental vehicles

When it comes to coverage for leased vehicles, the lessor also needs protection for their investment. Since the leasing company technically owns the vehicle, you will need to list it as an additional insured and beneficiary of the loss. Most leasing companies will require you to have collision and comprehensive coverage in addition to state required coverage. The lessor then receives any insurance compensation for the covered damage to the vehicle.

Here are some examples of coverage your rental agreement may require:

  • collision damage waiver covers damage to your vehicle caused by accidents, regardless of who is at fault.
  • full coverage protects you from damage caused by natural disasters, theft, vandalism, falling objects and other non-collision related incidents.
  • Gap insurance may also be required by your leasing company. This coverage pays the difference between the amount owed and the actual value of a car in the event of a covered total loss. If you need gap coverage, you may have the option of paying for gap coverage as a one-time upfront fee rather than adding it to your insurance policy.

How much does car insurance cost?

When looking for auto insurance coverage for your leased vehicle, you’ll likely need a comprehensive insurance policy that includes liability coverage as well as collision and all-risk coverage. The national average cost of insurance for a comprehensive insurance policy is $1,730 per year Where $144 per month.

However, the rate you pay for a policy varies greatly depending on the provider you choose, the state you live in, your driving history, and several other factors. See the table below to find out how much a full coverage policy costs from several major national providers.

Icons showing the factors that influence the cost of car insurance

Whether you decide to lease or buy a new car, you have plenty of options when it comes to quality auto cover. Here are our top picks of insurance providers based on coverage options, pricing, and customer satisfaction:

*Ratings are determined by our editorial review team. Learn more about our scoring methodology below.

#1 State Farm: Editor’s Choice

Better Business Bureau (BBB) ​​Rating: A+

AM Best financial strength rating: A++

State Farm offers a variety of discounts, including usage-based savings through two different programs. The company’s Drive Safe & Save™ program rewards customers’ safe driving habits in 47 states – California, Massachusetts and Rhode Island are the exceptions. The SteerClear® is designed to help young drivers under the age of 25 develop good driving habits. State Farm also ranks highly for customer satisfaction in many parts of the 2022 JD Power U.S. Auto Insurance Study℠.

keep reading: State Farm Insurance Review

#2 USAA: Low fares for the military

BBB rating: A+

AM Best financial strength rating: A++

USAA auto insurance is only available to active military personnel, veterans and their families. If you qualify for the company’s plans, you’ll have access to great coverage at affordable rates. The high ratings USAA receives from BBB and AM Best indicate the company’s solid reputation in the industry. The company also often receives the highest customer satisfaction score of any insurer in numerous JD Power studies.

keep reading: USAA Insurance Review

#3 Geico: Affordable for most drivers

BBB rating: A+

AM Best financial strength rating: A++

Geico is a great choice for many drivers due to its wide selection of coverage options and cheap car insurance rates. According to our rate estimates, 35-year-old drivers with good credit and a clean driving record pay about $1,308 per year on average for comprehensive coverage from Geico. At around 27% below the national average, this is one of the lowest rates for a national provider. Geico also offers a range of discounts that can lower monthly payments even further, including savings for safe drivers, good students and drivers who bundle policies.

keep reading: Geico Insurance Review

Car insurance when renting: Conclusion

If you choose to lease a vehicle, you’ll have plenty of affordable comprehensive insurance policy options to meet your rental company’s requirements. Our team recommends contacting multiple vendors to get free auto insurance quote and compare your options.

Car insurance when renting: FAQ

Our Methodology

Because consumers rely on us to provide unbiased and accurate information, we’ve created a comprehensive rating system to formulate our ranking of the best car insurance companies. We’ve collected data on dozens of car insurance providers to score companies on a wide range of ranking factors. The end result was an overall score for each provider, with insurers who scored the most points at the top of the list.

Here are the factors taken into account by our assessments:

  • Cost (30% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
  • Coverage (30% or full score): Companies that offer a variety of insurance coverage choices are more likely to meet consumer needs.
  • Reputation (15% of total score): Our research team considered market share, industry expert ratings, and years in business to assign this score.
  • Availability (10% of total score): Auto insurance companies with greater state availability and fewer eligibility criteria scored higher in this category.
  • Customer experience (15% of total score): This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by JD Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own customer analysis.

*Data correct at time of publication.

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