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When you lease a car in a Canadian province, you are typically required to carry car insurance to protect both yourself and the lessor. Here are some key points to keep in mind regarding car insurance for leased cars in Canadian provinces:

  1. Required coverage: Most lease agreements require you to carry at least the minimum amount of liability coverage required by law in your province. This coverage typically includes third-party liability insurance, which covers damages or injuries you cause to other drivers, passengers, and property.
  2. Optional coverage: You may also choose to carry additional coverage, such as collision and comprehensive insurance, to protect your leased vehicle in the event of an accident or theft.
  3. Deductible: If you choose to carry collision or comprehensive insurance, you’ll need to pay a deductible in the event of a claim. The amount of the deductible is determined by the insurance company and can vary depending on the type and amount of coverage you have.
  4. Who pays in case of an accident: If you have an accident while driving a leased car, the insurance policy typically covers the cost of repairs or replacement of the vehicle. However, the amount of coverage may depend on the type and amount of insurance you have, as well as the deductible you have chosen.
  5. Cost: The cost of car insurance for a leased car can vary depending on a number of factors, including your driving record, the type of vehicle you’re leasing, and the type and amount of insurance you choose to carry.

Here are some example rates for car insurance on leased cars in major Canadian cities:

  1. Toronto, Ontario:

  • A 2019 Honda Civic lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $190 per month.
  • A 2019 Toyota RAV4 lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $200 per month.
  1. Vancouver, British Columbia:

  • A 2020 Kia Sportage lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $160 per month.
  • A 2019 Hyundai Tucson lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $180 per month.
  1. Calgary, Alberta:

  • A 2019 Subaru Crosstrek lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $150 per month.
  • A 2020 Mazda CX-5 lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $180 per month.
  1. Montreal, Quebec:

  • A 2019 Honda CR-V lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $170 per month.
  • A 2019 Toyota Camry lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $190 per month.
  1. Halifax, Nova Scotia:

  • A 2020 Nissan Rogue lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $150 per month.
  • A 2019 Kia Sorento lease with $1,000 deductible, $2 million liability, and $500 collision and comprehensive coverage could cost around $170 per month.

Note that these are just example rates and your actual cost for car insurance on a leased car will depend on several factors, including your driving record, age, and location, as well as the make and model of the car, and the specific terms of your lease agreement.

Does a leased car have higher insurance?

In Canada, as in many other countries, the cost of car insurance depends on a myriad of factors, such as the driver’s age, driving history, location, type of vehicle, and more. When it comes to leasing versus owning, there are a few factors to consider:

  1. Coverage Requirements: Leasing companies usually require a higher level of insurance coverage for leased vehicles compared to what you might opt for if you own a vehicle outright. This often includes comprehensive and collision coverage with lower deductibles, which can make the insurance premiums higher.
  2. Gap Insurance: Some lease agreements might require you to have gap insurance or might include it in your lease. Gap insurance covers the difference between what you owe on the lease and the car’s actual cash value in case of a total loss. While this can increase the cost, it’s beneficial because if a leased vehicle is totaled or stolen, there might be a discrepancy between what the insurance company values the car at and what you still owe on your lease.
  3. Replacement Value: Some insurance providers offer a “new car replacement” type of coverage, which might be more relevant for leased vehicles since they are typically newer. This could affect the premium.
  4. Driving Record and Other Factors: Regardless of whether you’re leasing or owning, factors such as your driving record, where you live, how often you drive, and the make and model of the car will all influence your insurance rates.

Leased VS Financed VS Owned Car Insurance Difference

When comparing car insurance for leased, financed, and owned vehicles, the primary difference lies in the type and amount of coverage required. Here’s a breakdown of the general differences among these three scenarios:

  1. Leased Vehicles:
    • Coverage Requirements: Leasing companies often require lessees to carry higher levels of insurance than the minimum required by the state or province. This is because the leasing company technically owns the car, and they want to ensure their asset is well protected. Common requirements include comprehensive and collision coverage with low deductibles.
    • Gap Insurance: Many leasing companies either require or strongly recommend gap insurance. As mentioned previously, this covers the difference between the remaining amount owed on the lease and the actual cash value of the car if it’s totaled or stolen.
  2. Financed Vehicles:
    • Coverage Requirements: Like with leasing, if you finance a vehicle, the lender will require you to have comprehensive and collision coverage to protect their investment. The specifics can vary based on the lender, but the rationale is the same as with leasing: the bank or lender technically holds the title to the car until the loan is fully paid.
    • Gap Insurance: While it might not be as commonly required as with leased vehicles, gap insurance can still be crucial for financed cars, especially if the loan amount exceeds the car’s value.
  3. Owned Vehicles:
    • Coverage Requirements: If you own your vehicle outright, you are generally only required to carry the minimum insurance mandated by your state or province. However, it might still be a good idea to have comprehensive and collision coverage, especially if the car has significant value.
    • Flexibility: Owning your car gives you the most flexibility in determining your coverage levels. You can choose to drop certain coverages or opt for higher deductibles to reduce premiums if you wish.

In all three cases, liability insurance (covering damage to others and their property) is typically required by law, regardless of how you acquired the vehicle.

Lastly, irrespective of whether the car is leased, financed, or owned, factors like the driver’s age, driving record, location, type of vehicle, and more will influence the final insurance rate. It’s always recommended to shop around and get quotes from different insurers to ensure you’re getting the best deal.

Benefits of Leasing a Vehicle

List of Requirements

Leasing a vehicle in Canada, as in many other countries, offers a range of benefits that can make it an attractive option for many individuals and businesses. Here are some of the primary benefits of leasing a vehicle in Canada:

  1. Lower Monthly Payments: Generally, monthly lease payments are lower than loan payments for the same vehicle. This is because you’re only paying for the vehicle’s depreciation during the lease term, not its full value.
  2. Drive a Newer Car More Often: Leasing often allows you to drive a newer car every few years, which means you can benefit from the latest technology, safety features, and fuel efficiency advancements without committing to owning the vehicle long-term.
  3. Less Upfront Cash: Typically, leasing requires less money down than buying. Some lease deals even allow for $0 down.
  4. Warranty Coverage: Many lease terms coincide with the vehicle’s warranty period. This means major repairs might be covered under warranty for the duration of the lease.
  5. Tax Benefits: For businesses, lease payments can often be written off as an operational expense, providing tax advantages.
  6. No Resale Hassles: At the end of a lease, you simply return the vehicle to the dealership, avoiding the process and uncertainties of selling a used vehicle.
  7. Flexibility: At the end of your lease, you have options. You can choose to buy out the vehicle, start a new lease with a different car, or simply walk away (considering any end-of-lease obligations).
  8. Predictable Costs: Leasing can offer more predictable vehicle costs, especially if maintenance is included in the lease.
  9. Option to Buy: If you end up really liking the vehicle, you usually have the option to buy it at the end of the lease at a predetermined price.
  10. Customization Options: Some lease agreements may allow for certain vehicle customizations, though you’d need to restore the vehicle to its original condition or pay for the changes at lease-end if they affect the vehicle’s value.

Cons of Leasing a Vehicle


Leasing a vehicle in Canada does come with certain disadvantages. It’s essential to weigh these cons against the pros when considering leasing as an option. Here are some of the drawbacks:

  1. No Ownership Equity: At the end of the lease term, you won’t own the car. This means you won’t have any asset value to trade in or sell, unlike when you purchase a vehicle.
  2. Mileage Limits: Most leases have a specified maximum number of kilometers you can drive annually. If you exceed this limit, you’ll be charged for the extra kilometers, and these charges can be substantial.
  3. Wear and Tear Charges: Leases stipulate the condition the car must be in when returned. If there’s damage beyond “normal wear and tear”, you might face additional fees.
  4. Long-Term Cost: While monthly lease payments may be lower than financing payments, over the long term, continuously leasing vehicles can be more expensive than purchasing and keeping a car for many years.
  5. Early Termination Fees: If for any reason you need to end the lease early, you might be hit with significant termination fees.
  6. Customization Limitations: While you might be allowed certain customizations, any modifications that alter the vehicle’s value or can’t be easily undone can result in charges or violate the lease agreement.
  7. Insurance Costs: Some leasing companies require higher insurance coverage than what you might select if you owned the vehicle, leading to potentially higher insurance premiums.
  8. Locked-In Contract: Once you sign a lease agreement, you are typically committed for the term, which can be restrictive if your circumstances change.
  9. Continuous Payments: With leasing, you always have a car payment. When you finance a car, you’ll eventually pay it off, and if you choose to keep it, you’ll have a period without monthly car payments.
  10. End-of-Lease Costs: At the end of the lease, you might face additional costs, not only for wear and tear or excess mileage but also for things like disposition fees.
  11. Interest Rates: Depending on market conditions and your credit score, lease interest rates (often referred to as the “money factor”) might be higher than loan interest rates.

Making an Insurance Claim When Leasing a Vehicle

If you’re involved in an incident while driving a leased vehicle in Canada, the process for making an insurance claim is similar to that of a financed or owned vehicle. However, there are some specific aspects to be aware of due to the relationship with the leasing company. Here’s a step-by-step guide:

  1. Safety First: Ensure that everyone involved is safe. If there are injuries, call 911 immediately.
  2. Report the Incident: Depending on the severity and the jurisdiction, you might need to report the accident to the police.
  3. Document Everything:
    • Take photos of the scene, the damages to your vehicle and any other vehicles involved.
    • Get the contact and insurance details of other drivers involved.
    • Note down the names and contact details of any witnesses.
    • Write an account of how the accident happened while it’s fresh in your memory.
  4. Contact Your Insurance Provider: Inform your insurance company about the incident as soon as possible. They will guide you through their claims process.
  5. Inform the Leasing Company: After contacting your insurance, notify the leasing company about the incident. They will provide guidance on the steps you need to take, as the vehicle is technically their asset. Some leasing companies might have preferred repair shops or specific procedures to follow.
  6. Repairs:
    • If the vehicle is repairable, the insurance company will cover the cost of repairs (minus your deductible, if applicable) as per your policy. Ensure that all repairs are done to the standards required by the leasing company.
    • Some insurance policies might provide a rental car while your vehicle is being repaired.
  7. Total Loss:
    • If the car is deemed a total loss, the insurance company will pay out the vehicle’s actual cash value. Depending on your coverage and the car’s market value, this might not cover the remaining balance on your lease. This is where GAP (Guaranteed Auto Protection) insurance can be beneficial, as it covers the difference between the insurance payout and the outstanding lease balance.
    • After a total loss, your lease agreement typically terminates, but you might still owe charges like the deductible or any fees not covered by the insurance or GAP insurance.
  8. Follow Up: Stay in regular communication with your insurance adjuster and the leasing company to ensure that all necessary paperwork is completed and any outstanding issues are resolved.


Here are some frequently asked questions about car insurance for leased cars:

  1. Do I need special insurance for a leased car in Canada?
    • Answer: No, you don’t need “special” insurance, but leasing companies often require comprehensive and collision coverage, which may be more than the minimum provincial requirements.
  2. Is insurance more expensive for leased cars?
    • Answer: It can be. Because leasing companies usually require comprehensive and collision coverage with lower deductibles, premiums might be higher than if you were just purchasing the minimum coverage required by your province.
  3. Who is responsible for insuring a leased car?
    • Answer: The lessee (person who is leasing the car) is responsible for insuring it. The leasing company will usually provide specific requirements for coverage.
  4. What happens if my leased car is totaled?
    • Answer: If a leased car is totaled, the insurance company will pay the market value of the car. If there’s a gap between the payout and what you owe on the lease, GAP (Guaranteed Auto Protection) insurance can cover the difference.
  5. Can I transfer my existing insurance to a leased car?
    • Answer: Yes, you can usually transfer your insurance. However, you’ll need to ensure that the coverage meets the leasing company’s requirements. It’s essential to inform your insurer about the change to adjust your policy accordingly.
  6. What happens if I don’t get the required insurance on my leased car?
    • Answer: Failing to maintain the required insurance can be considered a breach of your lease agreement. This might result in financial penalties or even the termination of the lease.
  7. Do I need GAP insurance for my leased car?
    • Answer: While not always mandatory, GAP insurance is highly recommended for leased vehicles. It covers the difference between the car’s current market value and the remaining balance on your lease if the vehicle is totaled.
  8. What happens at the end of my lease if there’s damage to the car?
    • Answer: If there’s damage beyond “normal wear and tear,” you might be charged for the repairs when you return the car at the end of the lease term.
  9. Can I end my lease early?
    • Answer: This isn’t directly related to insurance, but yes, you can often end a lease early. However, there might be substantial penalties or fees for doing so. Always check your lease agreement for details.
  10. Do I need to inform my leasing company if I’ve been in an accident?
  • Answer: Yes, you should inform your leasing company if the vehicle has been in an accident, as they have a vested interest in the vehicle’s condition.
  1. If someone else drives my leased car and gets into an accident, who is responsible?
  • Answer: Typically, car insurance follows the vehicle, not the driver. So, if someone else is driving your leased car with your permission and gets into an accident, your insurance policy will usually be the primary one to respond. You, as the policyholder, will likely be responsible for any deductibles and potential rate increases.
  1. Can I take my leased car out of the country, like to the US?
  • Answer: Most lease agreements allow for occasional travel outside of Canada, such as trips to the US. However, you should notify your insurance provider and ensure you have the proper coverage for international travel. Also, check with your leasing company to see if they have any restrictions.
  1. Are modifications allowed on a leased vehicle, and how does it affect insurance?
  • Answer: Most lease agreements restrict significant modifications. Any modifications could also affect your insurance rates and might not be covered in the event of a claim. Before making any changes, consult with both your leasing company and insurance provider.
  1. Who pays for the insurance deductible if there’s a claim?
  • Answer: The lessee (or the driver, if different) is typically responsible for paying any applicable insurance deductibles in the event of a claim.
  1. What happens if the leased vehicle is stolen?
  • Answer: If your leased vehicle is stolen, you should report it to the police and your insurance company immediately. If the car is not recovered, your comprehensive insurance should cover the loss, subject to any deductibles. Again, GAP insurance might come into play if the insurance payout doesn’t cover the remaining balance on the lease.
  1. Is the insurance premium affected by the duration of my lease?
  • Answer: The duration of your lease doesn’t directly impact your insurance premium. However, the type and value of the car, coverage amounts, and your driving record, among other factors, will influence the premium.
  1. Can I use my leased vehicle for ride-sharing or commercial purposes?
  • Answer: Many lease agreements prohibit using the vehicle for commercial purposes, including ride-sharing. Additionally, using your vehicle for such purposes may require special insurance. Always consult your lease agreement and check with your insurance provider before engaging in ride-sharing or commercial activities.
  1. Do I need additional coverage for personal items in my leased car?
  • Answer: Personal items in your car, like electronics or clothing, are typically not covered by auto insurance. Instead, they might be covered by your home or renters’ insurance policy. Ensure you have adequate coverage for personal belongings if you often leave them in your vehicle.

About the Author: Valerie D. Hahn

Valerie is an insurance editor, journalist, and business professional at RateLab. She has more than 15 years of experience in personal financial products. She strives to educate readers and ensure that they are properly protected.

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