Best Auto Insurance for Leased Business Vehicles in 2024

Leasing a vehicle provides an easier way for individuals and companies to drive new cars.

Leased vehicles come with reduced upfront costs and high levels of convenience.

However, auto insurance laws still apply even when not using a vehicle with a personal auto lease, so you’ll still have to purchase business lease auto insurance for the vehicle, and this is where it gets a little tricky.

Every time the legal owner and the person keeping the car differ, carriers, especially mainstream auto insurers, have a hard time drafting auto insurance policies. This complication doesn’t remove the need for company lease car insurance.

You will still get a policy if you follow the proper criteria.

The business auto lease insurance rates are relatively similar, but if the correct procedures are not adhered to when purchasing auto insurance coverage for a leased vehicle, you may have problems getting the insurer to pay a claim.

Wondering how to get a business car lease or how to lease a vehicle under your business? We provide all the information you need on company lease car insurance in our guide below.

Before we get started, use your ZIP code to look at affordable business lease auto insurance quotes to conduct comparisons and find the best rates for your needs.

Vehicle Leasing Basics

Ready to learn about some of the basics for leasing a vehicle? Wondering how to get company car insurance? How to qualify for business car lease? Need to know about insuring a leased vehicle? What are the company lease car insurance rules?  Read through the next few sections to learn more.

How do I lease a vehicle?

Basically, a lease is a long term rental. You get to use the vehicle for an extended time frame while making monthly lease payments. If you are wondering how to lease a car for my business, it is important to know about the time frame for leases and the business car lease requirements.

Often, a lease could last up to three years, and that’s when you turn in the car or buy it at a price specified in your leasing contract. It is important to know the business car lease criteria. When it comes to leasing, there are some requirements:

• You are required to purchase insurance coverage for the vehicle
• You must service the vehicle
• Some leases will come with mileage limitations, and if you exceed them, you are charged
• Any repairs to the vehicle will come out of your pocket

While there are different commercial vehicle lease types, most vehicle leases have the same requirements.

Company car lease costs can differ based on your state and other factors. Many companies offer commercial car lease deals, but it is important to do your research to make sure the lease fits your needs and wants. There are many business vehicle leasing companies out there to choose from.

You don’t own the vehicle. The same is true for both business or personal car leases. Any damage the vehicle sustains in the course of your lease will come out of your pocket. However, purchasing auto insurance coverage for your leased business vehicle can protect you from such financial losses.

You’ll need at least minimum liability coverage (which we’ll discuss in more detail later), but in general for leased vehicles, the lease contract will define a set amount of additional coverage required for the vehicle.

Take a look at this table for commonly-required liability coverage for leased vehicles.

Average Liability Coverage for Leased Vehicles

Do you need business auto insurance for a leased business vehicle? Keep reading to find out.

What are some common terms for leased vehicles and insurance?

When you’re looking at business car lease insurance rates, private lease car insurance, and business or personal car lease information, there are a few terms to keep in mind:

• Rebates and Warranties – A rebate is a fixed sum that the leasing company will refund to you at the expiry of the lease if certain conditions are met. Read and understand the terms of the warranty before you drive off with the vehicle.
• Insurance Protection – The lease should include gap insurance, a type of coverage designed to protect you from paying the leasing company the value of the car, should it be totaled in an accident or stolen.
• Drive-Off Fees – The drive-off fee is an upfront payment (deposit) you will be asked to make and will include your fee for the first month. A drive-off fee is technically not a down payment.

What is a company or commercial leased vehicle? A commercial car lease is exactly what it sounds like—a vehicle leased for business use. Keep reading for more.

What about insuring a leased business vehicle? 

As a business owner, you will need auto coverage for your leased business vehicle, be it a van, truck, or a car. You will have to purchase a separate policy for your company cars since the business owner’s policy doesn’t cover automobiles.

You will be required to meet the minimum required auto liability insurance in your state in case you or one of your employees gets in an accident while driving the company car.

Some states will even require you to have Personal Injury Protection (PIP) or the uninsured/underinsured motorist protection for your business vehicle.

How much coverage your leased business vehicle will carry depends on your state and your agreement with the leasing company.

Do I need full coverage insurance to lease a car? In most cases, on top of the state-mandated coverage, the leasing company requires business owners to carry both comprehensive and collision policies for their cars. Read on for more information on commercial car lease insurance.

Essential Auto Insurance Coverage for Leased Business Vehicles

I’ve leased a car for my business; now what? You know you need insurance coverage for any vehicle on the road, but what kind of insurance do you need on a leased car?

It’s important to keep in mind that each state sets their own requirements and expectations for both insureds and insurance companies for commercial auto insurance coverage (the category within which business lease car insurance falls). For example, in Texas, personal injury protection (PIP) coverage is required, unless the insured declines it in writing.

Is insurance included on a leased car? Most lease contracts mandate specific levels of coverage, but you’ll typically need to purchase your own coverage.

Is it more expensive to insure a leased car? Rates themselves may not be higher, but you may be required to carry more insurance than is required for a car you own, so in effect, your insurance costs may be higher.

Keep reading to learn more about typical coverage types for leased vehicles.

Do I need liability coverage? 

BACF (Business Auto Coverage Form) is the document used to provide auto liability coverage for a business. By definition, the BACF is a form provided to businesses by the insurance provider when drafting the auto insurance policy for the company vehicles.

The BACF contains detailed information pertaining to the policy. Some of the information outlined in BACF include:

• Covered incidences or the cause of damage
• Type of damage covered
• Types of the vehicles
• Both insurers and insured obligations in the event of a covered incidence

Coverage includes both leased vehicles and vehicles owned by the business. The BACF helps businesses get practical commercial auto insurance coverage solutions by providing relevant information and available options.

Each vehicle used in your company’s business activities will be matched to its specific coverage, which means that you can choose each vehicle’s coverage type depending on its features and the type of coverage you need for it.

Average liability rates by state can be seen in the chart below.

Liability vs. Full Coverage Auto Insurance Rates by State

Currently, New Jersey has the highest rates for liability insurance while North Dakota has the lowest.

Do I need physical damage coverage? 

Physical damage coverage for a business vehicle includes comprehensive, collision, and specified perils. To find out more about these terms read our comparison of collision vs. comprehensive auto insurance.

Depending on the types and amount of driving you plan to do, along with where you’ll be driving, this may be coverage worth considering purchasing.

Do I need comprehensive coverage? 

Besides theft, comprehensive coverage covers all damages unrelated to a collision. These damages can result from any of the following:

• Natural disasters i.e. storm, floods, earthquakes
• Hitting wild animals or birds
• Fire
• Falling objects

Take a look at this video for more information.

Policy exclusions in comprehensive coverage include acts of war, mechanical breakdown, and wear and tear.

Speak to a licensed insurance agent to find out if this is the right coverage for your needs and check out our guide to find the best comprehensive auto insurance companies.

Do I need collision coverage?

Collision auto insurance coverage pays for damages resulting from the vehicle colliding with other vehicles on the road or if the car overturns.

Watch this video for more.

This is typically recommended as an addition on your policy, beyond just liability coverage (and in some cases may be required by the terms of your vehicle lease contract).

Do I need specified perils coverage?

Specified perils coverage provides protection from a specified set of risks clearly spelled out in the policy.

When comparing the replacement cost to the actual cash value (ACV), it’s important to understand what those terms mean. ACV is the amount the insurer will pay if the car is stolen or sustains physical damage.

The ACV is usually adjusted to match the vehicle’s current value according to its physical condition and depreciation. Therefore, the older the vehicle is, the less the settlement amount.

The Bottom Line for Business Lease Auto Insurance

You’ll need to purchase car insurance for your business lease vehicle. The coverage requirements may be higher for a leased vehicle, depending on the terms of your lease contract. The best way to make sure you’re getting competitive rates for your business lease car insurance is to compare auto insurance rates and save.

Bring down auto insurance rates for your leased business vehicle by comparing quotes from multiple providers. Use your ZIP code in our free comparison tool to find an auto insurance company near you. Our tool makes lease car insurance comparison easy!