The consequences for driving without insurance on a leased or financed vehicle will depend upon state laws as well as the terms of your lease. Laws differ by state but generally most state laws allow for a lien holder to take back a vehicle if you fail to uphold your part of the loan or lease contract.

Some lien holders will not repossess the car but will secure coverage on it and add these charges to your payments. This type of insurance does not come cheaply and the cost will be added to your payments normally, as allowable by law and the terms of your lease or loan paperwork.

The lien holder has a right to protect their interest or collateral, the vehicle, by means of repossession or getting "forced" insurance on it. If your loan agreement includes the provision allowing the lien holder to obtain auto insurance for the vehicle, the insurance charges are subject to interest in most states so the premiums will be much higher than if you purchased the insurance yourself typically.

To find out the specific repercussions you may face from your leasing company for not carrying insurance, usually meaning both state liability as well as physical damage coverages of collision and comprehensive, read through your leasing paperwork or speak with the financial institute the lease is through.

Keep in mind beyond the lien holder placing penalties or taking back the vehicle if you do not keep the required insurance on it, if you are found driving without insurance by law enforcement the penalties are usually pretty stiff. They may include registration and license suspension, impoundment of the vehicle, fines or even jail time.

If you need an insurance quote for coverage on your leased vehicle, start here with us.