Guide
Do I need to insure a leased car?
Insuring a leased car is broadly similar to insuring any other vehicle, although there are several important differences to consider. This guide explains the cover you will need and the key points to check when arranging your policy.
Is insurance included with car leasing?
Car leasing can help consolidate many motoring costs into a fixed monthly payment. However, insurance is not usually included in the lease, so you should factor this additional cost into your budget when choosing a vehicle. If you have already selected a vehicle, you can compare insurance costs through our partner, MoneySuperMarket. It is illegal to drive any car without valid insurance. Penalties may include a fine, points on your driving licence and, in serious cases, disqualification from driving.
What insurance policy do I need when leasing?
When leasing a car, you will generally need to arrange fully comprehensive insurance. Your lease agreement is likely to require fully comprehensive cover for the duration of the contract. Leasing companies typically require this level of cover because they remain the vehicle’s legal owner throughout the lease. Comprehensive insurance helps protect the vehicle against accidental damage and other insured risks.
When do I need to insure a leased car?
Most leasing providers require proof of insurance before the agreed delivery date. The policy does not usually need to begin when the lease is signed, but cover should be in place from the delivery date and remain valid until the vehicle is collected at the end of the contract.
What does fully comprehensive car insurance cover?
Fully comprehensive insurance typically covers damage to your leased car. If you are responsible for a collision, it can also cover damage to another person’s vehicle or property, as well as certain injury-related costs. Exact cover varies by policy, so always review the policy wording. Accidental damage to your vehicle or another person’s vehicle. Personal injury involving you or other people in an accident. Damage to another person’s property resulting from an accident. Loss of or damage to personal belongings, subject to policy limits and exclusions. Windscreen repair or replacement, subject to the policy terms. Cover may also apply if the vehicle is written off, stolen or damaged by fire. If you make a valid claim, you will normally pay the agreed excess and the insurer will manage the remaining covered costs, subject to the policy terms.
What’s not included in fully comprehensive cover?
Although fully comprehensive insurance provides a high level of protection, it does not cover every situation. Exclusions vary, so check your policy documents carefully. Claims may be declined where reasonable care was not taken—for example, if a vehicle was left unlocked or valuables were left in view. Driving without a valid licence may invalidate your insurance and can result in fines or other penalties. You may also be responsible for costs if the vehicle is seized or impounded. Standard wear and tear is not covered by motor insurance. For example, you should not expect a policy to pay for tyres that have worn out through normal use.
How do I insure my lease car?
Arranging insurance for a leased car is similar to insuring any other vehicle, with a few important differences. When obtaining a quote, tell the insurer that the vehicle is leased and provide accurate ownership and keeper details. This information is important if you need to make a claim. For a personal contract hire (PCH) agreement, you will usually be the policyholder and main driver, while the leasing company remains the registered owner. For business contract hire (BCH), the policy should reflect the business arrangement and meet the leasing provider’s requirements. Confirm the correct details with both the insurer and leasing provider.
What is GAP insurance?
A new vehicle can lose value over time. If a leased car is written off or stolen, the insurer’s settlement may be lower than the amount outstanding under the finance agreement. Guaranteed Asset Protection (GAP) insurance is designed to cover some or all of this shortfall, up to the limits and conditions stated in the policy.
Do I need GAP insurance for a leased car?
GAP insurance is not a legal requirement. Whether it is appropriate will depend on your lease agreement, the cover already available and your individual circumstances. Review the policy terms and consider seeking independent advice if you are unsure.
Is insurance more expensive for leased cars than owned ones?
Insuring a leased car is not necessarily more expensive than insuring an owned vehicle. However, the requirement for fully comprehensive cover may affect the premium. As with any motor policy, costs may be reduced by paying annually, maintaining a strong no-claims history, selecting an appropriate voluntary excess, or choosing a vehicle in a lower insurance group. Always ensure that any excess remains affordable and that the policy meets the requirements of your lease agreement.
Find out more about car leasing
If you’re new to car leasing, take a look at our easy-to-understand leasing guides that covers everything from how car leasing works to buying vs leasing and much more. If you’re ready to find your next vehicle, browse our latest car leasing deals.
Looking to lease a van? Find out how insurance works when leasing a van.
Looking to lease a van? Find out how insurance works when leasing a van.