Do Lease Cars Come With Insurance?

Whether you own it, finance it or lease it, every vehicle on UK’s roads needs insurance.

But, do lease cars come with insurance? What type of insurance do you need when you lease a car and is insurance more expensive for leased vehicles?

Let’s find out.

Does Car Leasing Include Insurance?

Standard car leasing contracts don’t typically come with vehicle insurance. However, you can opt for a lease agreement that includes insurance cover.

Still, not every leasing company offers car leasing agreements including insurance. 

What Is Included When Leasing a Car?

The monthly rentals you pay when you lease a car with no insurance cover road tax and come with a full manufacturer’s warranty.

Insurance, breakdown assistance, and maintenance packages are considered add-ons and cost extra. 

What Type of Insurance Do I Need for Car Leasing?

Under UK law, all drivers are required to have at least third-party insurance for the car, regardless of whether they own or lease it. 

However, most leasing companies ask drivers to take out comprehensive insurance for the leased car since it covers theft, damage from vandalism and natural disasters, as well as repair costs in case of an accident. 

For comparison, the minimum insurance requirement in the UK (third-party insurance) only covers damage to other vehicles. Here’s how it works)

Worth noting: Although comprehensive car insurance offers the highest level of cover, it doesn’t necessarily cover you for everything. Exclusion can include drunk driving, using the wrong fuel, and theft by carelessness.

How to set up insurance for my lease car?

Setting up car insurance for leased cars is similar to taking out an insurance policy for a car you own. 

The main difference is that the finance company should be listed as the owner of the vehicle on the policy. For that reason, you’ll have to inform the insurance company that you’re looking to insure a leased car and provide the insurer with the correct details from the leasing agreement.

For a personal car leasing with insurance, the person taking out the policy needs to have their name on the insurance certificate as the ‘named driver’. For business contract hire agreements, the insurance certificate should be in the name of the company or the director’s name.

Combined leasing and insurance agreement

Nowadays, many leasing companies offer car leasing with insurance included.

There are several advantages to opting for a combined agreement. First, you can avoid the hassle of taking out a policy yourself and figuring out details like what type of insurance you’re required to have and what to put on the insurance certificate. 

Second, you won’t have to worry about your premiums getting increased every year. Combined agreements come with fixed monthly rentals, meaning you will pay a fixed amount for the entirety of the contract. 

What’s more, you can ask the company to include any add-ons you deem necessary (for a higher monthly rental), such as a Guaranteed Asset Protection (GAP) policy This policy will help pay ‘the gap’ between the amount you paid for the car and the insurer’s payout if the car is stolen or written off.

Finally, a lease car with insurance means the repair process would go much faster in case your vehicle is damaged. This is because the lease provider won’t have to wait for a third-party insurance company to approve the repair work. 

Is Car Insurance More Expensive When You Lease a Car?

Insurance on a lease car is generally more expensive but not because the insurance policy itself is pricier but because leasing companies require higher minimum coverage than what car owners pay for their vehicles. 

Most leasing companies require customers to purchase fully comprehensive auto insurance, which provides the highest level of cover but is also the most expensive type of insurance you can take out. 

How to lower insurance premiums

If the insurance company offered a quote that you can’t afford, here are some things that might help you pay less for insurance:

• Choose the right vehicle

The monthly premiums you pay for insurance depend on the type and size of vehicle you’re driving (among other things). The cheaper (and smaller) the car, the less, the lower the cost of the premiums. 

• Increase your voluntary excess

Insurers offer lower premiums for those that pay more in voluntary excess because agreeing to a higher excess means the insurance company will pay less when you make a claim and indicates that you’re unlikely to make low-value claims. 

• Consider adding a second driver

Adding a second driver to your policy can help you land lower premiums but that’s not always the case. It mainly depends on your circumstances and can sometimes increase your insurance premiums.

• Build a “no claims” discount

Insurance companies offer bonuses to drivers who have managed to avoid making a claim. Most insurers give discounts of 20% and more after the first year. 

• Find a secure parking

Parking your car in a secure place such as a garage or driveway reduces the chance of theft and vandalism, which could, in turn, reduce your premium.

• Pick the annual payment option

Paying your premiums every month might seem like a more sustainable option, but it’s more expensive in the long run because you pay interest as well.

• Install a black box

Some insurance companies will offer you a cheaper quote if you allow them to track your driving via a telematics device or a black box. This device monitors your speed, acceleration, and distance, which helps determine whether you’re a safe driver.

Bottom Line

So, do lease cars come with insurance? Typically, they don’t, which means you’ll have to take out an insurance policy separately. However, there are leasing companies that offer combined leasing and insurance agreements, which are often customisable and can be tailored to your needs.