To the best of our knowledge, it is not true that a lease company will pay for car insurance on a vehicle that you are leasing from them. The financial institute that owns the vehicle that you are leasing typically has in the leasing documents that you are responsible for carrying not only the state minimum mandated liability auto insurance on the vehicle but physical damage coverages of collision and comprehensive.

If you do not carry the proper insurance on the car and the leasing company finds out, it could be a breach of your leasing contract. What could happen due to this would be determined by the terms of your leasing documents. It may be that the leasing company takes out "forced" insurance on the vehicle, which would cover their asset. Forced insurance is normally charged to you if you let the required insurance lapse.

When the lessor gets the “forced” insurance for you, these charges are subject to interest and the premiums will be higher than if you purchased the insurance yourself. This forced insurance typically provides protection to the bank or other financial institute, not you the lessee, for their interest in the car.