How to insure a leased car
Insurance is one of the most important parts of leasing (or owning) a car. Not only is it a legal requirement of driving in the UK, but it also covers the cost of any damage or injuries sustained in an accident.
Depending on the type of insurance cover you choose, it will also financially protect you if your lease car is stolen, vandalised, catches fire or is involved in an accident.
In this article, we'll dive into everything you need to know about insuring your lease car. We'll cover the type of insurance you'll need, when to get insured, and whose name to put on the papers.
Do you need insurance for a lease car?
Yes, all cars – whether they’re owned, leased or rented – must be appropriately insured before driving on a public road.
This is a legal requirement in the UK, and you could face a fine of up to £1,000 if you drive your lease car without insurance.
Plus, you run the risk of having your car seized – leaving you to pay your finance company the full value of the lease car.
For this reason, car lease finance companies also often include an insurance stipulation in their contracts. It's important to carefully review your leasing terms regarding any specific insurance requirements, as many lenders may require you to have a particular type of insurance.
Is insurance included in my car lease?
No, when you lease a car, insurance coverage will not usually be included in your lease agreement.
Some leasing companies have started offering convenient “all inclusive” packages, but this is rare – and frequently expensive.
Who is responsible for insuring a lease vehicle?
The person or business named in the financial agreement is the person responsible for making sure the lease vehicle is insured correctly.
Make sure you tell your insurance provider that the car is leased and be completely honest about any information you provide. Read the questions carefully and consult your leasing contract for details regarding:
- The registered owner of the vehicle
- The registered keeper of the vehicle
This is important. If you lie or do not declare the right information, your insurance policy will be considered invalid, and your car will not be properly covered.
Read more: Who is the owner and registered keeper of a lease car?
What type of insurance do I need for a lease car?
In most cases, finance companies will state in their contract that you must have fully comprehensive insurance on your lease car. This means your vehicle will be completely covered in the event of any incidents, including:
- Theft
- Fire
- Vandalism
- Natural disasters
- Third party damages
- Damage to your leased vehicle in an accident
- Injuries you may cause to others
- Injuries to yourself
Without comprehensive insurance, you may be financially liable for any damages to the lease vehicle during your contract term.
Read more: What happens if you’re hit by an uninsured driver?
What is GAP insurance?
GAP (Guaranteed Asset Protection) insurance is an additional coverage option for lease vehicles. It covers the difference between the value of your leased car and the amount you owe on the lease contract in the event of a total loss.
GAP insurance can be a good idea as it protects you from potentially expensive fees if your lease car is stolen or written off.
Is it more expensive to insure a lease car?
Technically, insuring a lease car may be slightly more expensive compared to insuring a vehicle you own outright. This is because finance providers typically demand comprehensive insurance coverage for lease cars, which means you can’t opt for cheaper ‘Third Party only’ coverage options.
However, there is no price difference between taking out comprehensive insurance for a lease car and comprehensive insurance for an owned car.
Other than coverage, some factors that determine your car insurance include:
- VALUE: More expensive cars generally have higher insurance premiums
- DRIVING HISTORY: Your driving record can influence your insurance rates
- AGE: Younger drivers will usually pay a higher price for insurance
Can I insure a second driver on my lease car?
Yes, you can usually add additional drivers to your lease car's insurance policy.
However, it's important to note that the additional driver's driving history and age may impact your overall insurance premium, so it might be a good idea to talk to your insurance provider first before adding a second driver.
When should I insure my lease car?
It's crucial to have insurance coverage in place before driving your leased vehicle. In some cases, you may need to provide proof of insurance to the leasing company before taking possession of the car. [KT1]
We recommend contacting your insurance provider in advance to arrange coverage so that the lease car is covered from the moment it’s delivered.
Leap Vehicle Leasing is not an insurance broker. If you’re unsure about anything or have any questions, we recommend speaking directly with your insurance company.
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