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Insurance for a Leased Car: Required Coverage, Deductible Limits and Gap

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On a leased car you need collision and comprehensive for the life of the lease, at a deductible no higher than the leasing company allows, and the leasing company listed on your policy. Some lessors also require liability limits well above your state's minimum. Triple-I says gap is generally required on a lease. Your lease may include it, so read the contract before you buy a second layer.

Key takeaways

  • The leasing company owns the car. Volvo Car Financial Services says that is why it is listed as loss payee: so insurance money goes to repairing the vehicle.
  • Infiniti, Volvo, Toyota, Lexus and BMW finance arms all cap the collision and comprehensive deductible on a lease at $1,000 on their help pages.
  • Infiniti Financial Services (outside Florida) and Volvo Car Financial Services require at least 100/300/50 liability. Toyota, Lexus and BMW accept the state minimum.
  • The Federal Reserve Board's 2003 leasing guide said many leases included gap "as a standard feature of the lease without a separate charge." Check your own contract for a gap clause.

This guide is part of our car insurance coverage explained section. If you are financing rather than leasing, see insurance requirements on a financed car.

What insurance do you need on a leased car?

Three things, on the leases above:

  1. Physical damage coverage, meaning collision and comprehensive, for the full value of the car. Toyota Financial Services says a lease requires "physical damage insurance for the full value of the vehicle." American Honda Finance says you must keep "physical damage, comprehensive, and collision insurance coverage for the duration of your contract."
  2. Liability coverage at the lessor's minimum, which may be your state minimum or something higher.
  3. The lessor named on the policy. Infiniti, Volvo and Honda ask to be listed as both loss payee and additional insured.

The reason is ownership. Volvo Car Financial Services puts it plainly: "a leasing company is the owner of a leased vehicle, and is listed as the Loss Payee on your policy. This is to ensure the proceeds from insurance settlements are used to repair damages to the vehicle." If you want a refresher on what each coverage pays for, see comprehensive vs collision.

What do manufacturer finance companies require on a lease?

Here is what six captive finance companies publish for leases on their own help pages, as of October 19, 2026. Your lease agreement is the controlling document, and several of these pages say so.

LessorCollision and comprehensiveMaximum deductibleLiability requiredLessor listed as
Infiniti Financial ServicesRequired$1,000 each100/300/50, or $300,000 combined single limit; Florida leases dated after April 20, 2017: Florida state minimumLoss payee and additional insured (Nissan-Infiniti LT)
Volvo Car Financial ServicesRequired$1,000 each100/300/50, or $500,000 combined single limitLoss payee and additional insured
Toyota Financial ServicesPhysical damage for full value$1,000State law minimumNot stated on the page
Lexus Financial ServicesPhysical damage for full value$1,000State minimum where the car is garagedNot stated on the page
BMW Financial ServicesRequired$1,000State minimumNot stated on the page
American Honda FinanceRequiredNot stated on the pageNot stated on the pageAdditional insured and loss payee (Honda Lease Trust; HVT, Inc. in NY and VA)

Liability limits read as bodily injury per person / bodily injury per accident / property damage, in thousands of dollars. Our explainer on what 25/50/25 means walks through the format.

Infiniti's page adds a Florida exception: "For FL leases dated after 4.20.17," its minimum requirements "have been revised to align with the state minimum by Florida state law." If you lease in Florida, check the figure printed in your own contract.

Why do some leases require higher liability limits than the state?

Because the lessor owns the car, and an owner can be pulled into a claim. Volvo Car Financial Services says the additional insured clause "affords the leasing company protection under the liability section of the insurance policy." In other words, your liability coverage also defends the leasing company.

Federal law limits that exposure. Under 49 U.S.C. § 30106, a business that rents or leases vehicles is not liable under state law, simply for being the owner, for harm arising from the use of the vehicle during the lease, as long as there is no negligence or criminal wrongdoing on its part. The same section says it does not override state financial responsibility laws.

Florida shows how state law ties into lease insurance. Florida Statutes § 324.021(9)(b) says a lessor under a lease of one year or longer that requires the lessee to carry at least $100,000/$300,000 bodily injury and $50,000 property damage liability, or a $500,000 combined limit, "shall not be deemed the owner" of the vehicle for financial responsibility purposes, as long as that insurance is in effect. Those are the same split limits Volvo and Infiniti (outside Florida) print on their lease pages.

Higher limits protect you too, not only the lessor. For how state floors compare, see car insurance state minimums.

How high can your deductible be on a leased car?

On the leases above, $1,000. Infiniti, Volvo, Toyota, Lexus and BMW all publish a $1,000 maximum for collision and comprehensive on a lease. American Honda Finance's lease page does not state a cap, so check your contract.

Leases are often stricter than loans from the same company. Toyota Financial Services says that on a financed vehicle "there are no deductible limitations imposed by TFS," while its leases cap the deductible at $1,000. Lexus Financial Services says the same: no deductible limit when you finance, $1,000 when you lease.

That cap matters when you shop. Raising your deductible to $2,000 to save on the premium could put you out of compliance with the lease. The trade-off between $500 and $1,000 is worked through in our $500 vs $1,000 deductible guide.

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Do you need gap insurance on a leased car?

Usually yes, in some form. Triple-I says to consider gap if you leased the vehicle and notes that "carrying gap insurance is generally required for a lease."

The gap exists because the car loses value faster than you pay down the lease. Triple-I says "most cars lose 20 percent of their value within a year," and standard policies pay the car's current market value at the time of a claim. The Federal Reserve Board's Keys to Vehicle Leasing guide (last updated 2003) defines the lease gap amount as "the amount by which the early termination payoff, not including any past-due amounts, exceeds the insured value of your vehicle."

The Federal Reserve's worked example (2003), on a car that is stolen:

Without gapWith gap
Lease payoff at the time of the theft$14,000$14,000
Insured value of the car$12,000$12,000
Insurance paid to the lessor (insured value minus $500 deductible)$11,500$11,500
Gap amount ($14,000 minus $12,000)You pay itCovered
What you still owe the lessor$2,500$500 (the deductible)

The same guide notes that gap does not refund the $3,000 capitalized cost reduction paid at signing in its example and does not cover past-due amounts you owe under the lease. In most cases, it adds, gap also does not cover your insurance deductible or excess wear and use.

Is gap already included in your lease?

It may be. The Federal Reserve Board's 2003 leasing guide said "many lease agreements include gap coverage as a standard feature of the lease without a separate charge," while "other leases offer gap coverage as an optional feature for an additional charge." That guide has not been updated since 2003, so treat it as a reason to check your contract, not as a description of today's leases.

Before you add gap from your insurer, check the lease for a gap or gap waiver clause. If the lease includes it, you may not need a separate gap product. Two conditions to watch, from the 2003 Federal Reserve guide: leases that include gap "often require you to maintain your vehicle insurance and not be in default at the time of the loss" to receive it.

If your lease does not include gap, you can buy it. The NAIC says Guaranteed Asset Protection, "sometimes called loan/lease coverage or debt cancellation," can be purchased "from a lender, your car dealer, or an insurance company or agent." Triple-I says most car insurers offer it and typically charge less than the dealer, adding that on most policies, gap with collision and comprehensive adds "only about $20 a year." Two state regulators add cautions about dealer products. The Texas Department of Insurance says gap products from a car dealer or bank "might not be insurance" and that it cannot help with problems on those. Washington's Office of the Insurance Commissioner says dealer products are often "a debt waiver agreement they advertise as gap insurance." Our main guide on whether you need gap insurance compares the options in detail.

What happens if a leased car is totaled?

Ford Credit's total-loss FAQ lays out the sequence at Ford Credit. Your insurer sets the actual cash value, and "the settlement check is typically made out to us." You are "generally responsible for your deductible and any balance not covered by the primary insurance company," which is where gap comes in. Ford Credit says to keep making monthly payments until the claim is resolved and the account is closed, and that "if you have purchased GAP you will need to file with them separately."

One lease-specific detail from the same page: "FMCC and LAFS does not allow diminished value claims on lease vehicles." FMCC is Ford Motor Credit Company.

If your payout comes in below what you owe, our guide to what happens when your car is totaled and you owe more than it's worth covers how the value is set and how to dispute it. Lease terms vary by company and state, so confirm the exact insurance and gap terms in your lease agreement with the leasing company.

Frequently asked questions

Do you need full coverage on a leased car?

Yes. Every lessor in the table above requires collision and comprehensive, or physical damage coverage for the full value of the car, for the length of the lease.

Can I lease a car with state minimum liability?

With some lessors. Toyota, Lexus and BMW accept your state's minimum liability on their help pages. Infiniti (outside Florida) and Volvo require at least 100/300/50 or a combined single limit.

What is the difference between additional insured and loss payee?

Volvo Car Financial Services explains both: the additional insured clause protects the leasing company under the liability part of your policy, and the loss payee listing makes sure damage settlements go to repairing the car it owns.

Does a lease come with gap insurance?

Your lease may include it; check your contract for a gap or gap waiver clause. The Federal Reserve Board's 2003 leasing guide said many leases then included gap at no separate charge.

Can I raise my deductible above $1,000 on a lease?

Not with Infiniti, Volvo, Toyota, Lexus or BMW, which all cap lease deductibles at $1,000 on their help pages. Check your lease before changing your deductible.

Sources

Lessor requirements and lease terms change. Every figure above is taken from the page or statute cited, as accessed October 19, 2026. Your lease agreement governs. This is general information, not legal advice.