Do I Need To Insure A Lease Car?
Every vehicle on UK roads requires insurance by law and a lease car is no different. But does leasing a vehicle guarantee you protection as part of the monthly payments?
Read on to find out everything you need to know about insuring your new leased motor.
Is insurance included?
When leasing a car, you’ll pay a set monthly fee to use a brand-new vehicle for 2-4 years.
For the most part, insurance won’t be included with the deal, but it will still be your responsibility to insure the car before the delivery date.
Some lease companies and providers will offer ‘complete care’ or ‘total care’ packages with insurance included in the monthly payments. The only cost you need to worry about is fuel and – depending on the company you use – repairs for accidental damage.
Car leasing with insurance
Of course there are exceptions to this rule. Some leasing companies and providers offer packages which include insurance, often with asset protection and maintenance thrown in too.
The following is typically included with these types of deals:
- Insured lease vehicle with cover for repairs in an accident and fire or theft.
- Breakdown cover.
- All routine maintenance – tyres, brakes, exhaust, wipers etc.
- Total Loss Protection – helps prevent financial shortfall if your vehicle is written off.
- Extends cover to family members if they’re using the car (provided the leasing company agrees to them using it).
Remember: If you don’t opt for an insured lease deal, you will need to arrange the policy yourself. Here’s what you need to know about insuring a lease car.
What insurance policy do I need when leasing?
A leasing company (or provider, if you’re going directly to them) want to protect the car that they have a vested interest in and have leased out to you. For this reason, you’ll need a fully comprehensive insurance policy.
It’s usually the most expensive type of cover but offers the most protection in return. ‘Fully comp’ covers you for damage to other people and their car, as well as yourself and your car.
This is important for two reasons. Firstly, it protects both you and any passengers you may be carrying at the time if you’re involved in an accident. Secondly, it ensures you won’t be whacked with an unexpected bill for any damage to the car. The insurance provider will only expect you to pay the excess specified when taking out the policy if you need to claim.
Unlike third-party insurance policies, fully comprehensive cover will mostly guarantee you the following:
- Cover for damage to other people’s property.
- Covers passengers if they get injured.
- Cover for you and your car.
- Windscreen repair.
- A courtesy car if yours is being repaired.
Remember: the extent of cover offered will differ from insurer to insurer, so be sure to check the documents of each policy you consider.
What’s not included?
There are certain circumstances which you need to be aware of whereby an insurer won’t cover you or will void your policy. These are:
- If you’re under the influence of alcohol or drugs, any claim will be invalid.
- General wear and tear damage to your car isn’t covered by a fully comprehensive policy.
- If you or someone else puts the wrong fuel in your car, you probably won’t be able to get cover for any repair costs needed.
How do I insure my lease car?
You’ll be glad to know that insuring a lease vehicle is no more difficult than if you were insuring a car you had bought. The main difference is that the leasing company is the registered keeper and owner of the car, not you. For the most part, this means you won’t have to worry about taxing your new motor. However, be sure to check this with the leasing company, as some specify that it’s only included for the first year.
1. Get a quote
Thanks to the plethora of insurance comparison websites on the internet, getting a quote for you’re a car you’ve leased is no more difficult than if you were to own the vehicle. However, there’s a slightly different method involved in the process you need to be aware of. Don’t worry though, it only requires swapping a through details around and doesn’t make the experience any more painstaking.
To see your new insurance quote you will need to:
- Notify the insurance provider that you aren’t the registered keeper before getting a quote, as they may refuse to pay out for a claim otherwise.
- For a personal lease, put yourself as the main policy holder for the insurance. For a business deal, the insurance certificate needs to be in the company or directors’ name.
- Have the registration number of the car to proceed with any policy. Be sure to check your contract or ask the finance provider for this information.
2. Get the right dates
It’s important that you remember to specify the start date of your insurance policy the same as the delivery date of your lease car. Likewise, it’s in your best interest to make sure that your cover lasts right up until the day the car is collected by, or returned to, the provider.
Arranging a start date which is too early will mean you’re paying for days where you’re not driving the car. If your insurance begins after your car arrives, you won’t be able to drive it legally up until that point.
At the end of your agreement, the car will still need to be insured, regardless of whether it’s being collected by the company you got it from or you’re dropping it off.
So, be sure to confirm with the leasing company the day of delivery and collection for your new motor.
3. Compare prices
Once you’ve finalised your details you can then start to compare premiums from a variety of providers. At this point, it’s important to not just go off price alone, but look at the summary of what each policy includes so that you’re happy with the conditions.
Things to look out for when comparing offers include:
- Courtesy cars – does the provider offer a replacement car if yours needs repairing?
- Windshield repair – some insurance companies may include this as part of your comprehensive policy, so be sure to check this if you want this feature included.
- Breakdown cover – again, this may be included in some policies, or you may find it’s an optional extra, the cost of which will be added to your quote.
- Telematics/black box insurance – often advertised as the cheapest policy on the list. This type of insurance requires a device to be fitted to your lease car that monitors your driving style and the times you’re on the road. Your monthly premium will reflect this, so consider whether it’s worthwhile (e.g. if you do night shifts, driving outside of peak times could lead to your quote increasing mid-policy, if the insurer deems you as a higher risk.)
4. Decide how you want to pay
This depends on your personal preference and the budget you have.
Each insurance policy allows you to pay monthly or get it all out of the way in one lump sum. If you decide to do the latter, there won’t be any added interest on top of the original total cost for the year. If you can afford to do this and don’t want insurance and lease vehicle payments going out each month, then you can save more money by doing so.
Alternatively, not everybody will be able to afford to pay upfront for their insurance, meaning a more manageable amount will be taken out each month. In this instance, you will pay a deposit upon confirmation of your policy (often a little cheaper than your agreed monthly price) and then this will go up to the original price for the remaining 11 months.
Once you’ve decided how you’re going to pay for your insurance policy, all that’s left to do is finalise your payment details with your chosen provider.
What about GAP insurance?
GAP (Guaranteed Asset Protection) insurance is another option available to you when leasing a car.
In short, GAP insurance covers any outstanding finance on your new motor if it’s written off or stolen. While this is the worst-case scenario, it’s not completely out of the question.
If the car is stolen, it’s important to report the crime to the police first and then make your insurance provider and the leasing company/provider aware of the situation.
The insurer and provider of your lease will work together to try and agree a settlement figure. However, if the payout offered doesn’t cover the amount required, it will be your responsibility to settle the outstanding finance for the vehicle.
Do I need GAP insurance?
As mentioned above, GAP insurance is optional. If you do decide to take out a policy, it will be separate to your main comprehensive cover.
This can be done either through a third-party provider who is separate from your main policy insurer, or you could use the same company, as long as they offer this service. Some businesses specialise in offering GAP insurance, so it’s worth shopping around different websites in order to get the best price.
It’s worth considering GAP insurance if you can afford to. It’s peace of mind in that it means you won’t have to fork out extra money to settle finance on your lease vehicle, should it be stolen or deemed a write-off.
Like the idea of low monthly payments on your car lease and insurance? Then see our list of the cheapest cars to insure in 2020.
If you like any of the cars on our list or already have your ideal new motor in mind, find it in minutes using our simple manufacturer and model search. Or you can specify your monthly budget here to guarantee your next vehicle doesn’t break the bank.
Want to find out more about what GAP insurance includes and how much it costs? Then check out our complete guide for this extensive cover.
To learn more about leasing or for answers to our FAQs, visit our handy guides page.