Leasing vs. Buying: How Insurance Costs Compare 

When deciding between leasing or buying a car, many people focus on monthly payments and long-term value. However, insurance costs can also significantly impact your total expenses.

How Leasing a Vehicle Impacts Insurance

Leased vehicles typically come with higher insurance premiums. This is because leasing companies usually require more robust coverage to protect their investment. Most lease agreements mandate both collision and comprehensive insurance, often with lower deductibles. Additionally, lessors may require gap insurance, which can help cover the difference between the car’s value and the remaining lease balance if the vehicle is totaled or stolen.

In contrast, buying a car gives you more flexibility in choosing your insurance coverage. While lenders may still require full coverage if you finance the vehicle, once the loan is paid off, you can opt for liability-only insurance if the car’s value has depreciated significantly. This can lead to substantial savings over time.

Another factor is vehicle type and usage. Leased cars are often newer models, which are more expensive to insure due to higher repair costs and replacement values. Buyers, especially those purchasing used vehicles, may benefit from lower premiums.

While leasing may offer lower upfront costs and access to newer vehicles, it often comes with higher insurance obligations. On the other hand, buyers typically enjoy more control over their coverage and potential long-term savings.

Before making a decision, it’s wise to get insurance quotes for both scenarios. Understanding how insurance fits into the total cost of ownership can help you make a more informed financial choice.

Learn More

For more insurance guidance, contact SIA, LLC.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.