If you're looking to lease a car, you've probably got questions about how the insurance works. In this post, we'll guide you through it all, looking at what type of insurance you need and how you can lower the cost of your premium.
We know . . . insurance matters can be a little boring (well, okay, they can be verrryyy boring), but it's an important part of life, so you'll thank us in the end!
Is Insurance Included?
Long story short, car insurance is not usually included as part of car leasing deals. In other words, it is the sole responsibility of the individual (i.e. you) or the business that's taken out the leased vehicle to arrange insurance. Same as with ordinary car finance.
Do I Need to Insure a Lease Car?
Bottom line: yes you do.
As part of the continuous insurance enforcement rule and the Road Traffic Act of 1988, car insurance is a legal requirement for every vehicle in the UK . That's true whether you own, finance or lease your vehicle.
What Kind of Insurance Do I Need?
Unlike with a car that you've bought outright, third party insurance (which only covers damage to other vehicles) on a leased car is not permitted, so you'll need to take out a fully comprehensive insurance policy.
What is fully comprehensive cover, exactly? It's usually the most expensive type of cover, but it's also the one that offers the most protection in return. Basically, it means you'll be covered for any damage to:
- Other people
- Their property
- Your own property (in this case, the vehicle)
The whole shebang, in other words. It covers any damage done to you or your lease car and any damage which you cause to others.
For personal contract hire agreements, the person taking out the lease agreement has to be the main policy holder. For business contract hire agreements, the car insurance certificate should be in the company name or the director's name.
What About GAP Insurance?
If you’re set on having a fully-insured lease vehicle, lease GAP (Guaranteed Asset Protection) insurance is a great bonus to have on top of your existing policy. Since the dealership is only lending you the vehicle, it’s in the best interest of both you and them to give it the best cover possible.
GAP insurance will cover any outstanding finance on your car if it is written off or stolen, freeing you from the hassle of having to make up the remaining debt to the lender.
The main purpose of GAP insurance is to work alongside your comprehensive policy. As such, it's not a legal requirement for you to have it. However, some leasing contracts may recommend that you take it in order to offer you greater protection against damage or theft, and we'd probably agree with them!
How Do I Insure My Lease Car?
The same way as with regular motor insurance or when you finance or buy a car in any other way. Your new car needs to be insured from the day it is delivered to you, and it has to stay insured until the day it is returned to the finance provider. You'll need to inform your insurer that the finance company (and not you) is the registered owner of the lease vehicle.
How Do I Lower My Insurance Premiums?
We know . . . insurance can cost a fortune, especially for younger drivers. Luckily for you, we've put together a few tips and tricks to help lower the burden and make insuring your lease car as affordable as possible.
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Pay attention to the car's insurance group: Each car is assigned an insurance group number (the lowest number being 1, and the highest number being 50) which depicts the cost of insuring the vehicle. As a general rule, the less valuable a vehicle is, the lower its insurance premium is going to be.
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Put an additional driver on the policy: In the eyes of insurers, an extra driver can help spread the risk of the policy, especially if they are seen as a lower risk than you. Many factors can impact just how that risk is quantified, including the person's age, marital status, license type and driving history. (Case in point: if your dad has 6 points and 2 or more car crashes to his name, this step is probably best avoided!)
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Reconsider where you park your car: This may come as a surprise to some people, but where you park your car can actually make a big difference to the overall cost of your insurance. That's because parking location directly correlates with the risk of vandalism and theft. In simple terms, someone is more likely to target your car if it's parked in the street than if it is parked in your garage or driveway (though there are rare circumstances where street parking can actually turn out cheaper).
Street parking usually carries with it a greater element of risk, and if there's one thing insurers don't like, it's risk!
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Don't make claims for minor incidents: The no claims bonus is one of the most powerful influences when it comes to lowering your car insurance premiums. That being the case, making a claim for minor damages which cost only a little more than your excess will do more harm than good in the long run. You should only claim on your insurance for any major damages, in which case your monthly payments will keep getting lower overtime.
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Pay yearly if possible: Yep, rather than paying in spread-out instalments over the course of a year, paying in standalone 12-month blocks can take a large chunk off the overall cost of your plan. So if you've got the cash to pay for your insurance in one lump sum, do it. It's only going to save you money.
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Shop around: Like with a great many things, the insurance world is a free market. In the same way that you're unlikely to get the best deal on a food item if you only look in one shop, you're also unlikely to get the best insurance deal if you only look at one insurance provider.
Remember, insurance is a business at the end of the day, so every insurance company is going to be competing for your attention. It's up to you to find the one most worthy of that attention. Choose wisely and don't feel pressured.
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Take a higher excess amount: The amount you’re willing to pay in the event of a claim can also have a big impact on your monthly repayment amount. The higher the excess you’re willing to pay, the lower your monthly payments will be, and vice versa. Most drivers tend to aim for a balancing act here by not paying too much and not paying too little, but you'd be well within your rights not to follow their example.
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Have a black box fitted: A black box is a telematics device fitted into the dashboard which tracks things like your speed and braking. Its purpose is to measure how aggressively or how responsibly you drive. Overtime, reliable drivers (you, hopefully) can expect to see large reductions in their premiums.
Bear in mind that in order to have a black box fitted, you're going to need the permission of the funder whom your contract is with.
Summing Up
So there you have it: all you need to know about insurance when it comes to leasing. Yes, you do need to set it up yourself and, yes, it can be expensive, but we've outlined ways that you can keep that cost down.
Don't say we're not nice to you!
Leasing With LeaseLoco
LeaseLoco makes it super quick and easy to search through the hottest car and van leasing deals on the market. We want to give you every confidence that you are working with the very best brokers and car dealers, which is why all of our leasing partners have signed our Ethical Code of Conduct and why we have the highest advertiser partner criteria in the industry.
Plus, all of our available deals include . . .
- FREE delivery to your door (mainland UK, some locations may incur an additional charge)
- Manufacturer's warranty
- Full breakdown cover
- Road tax
If you’ve read the benefits of car leasing here in this guide and think that leasing a car is the best option for you, then why not check out the hottest deals available to find one that suits you best.
FAQs
Is insurance included when leasing?
- Generally not, no.
Do lease companies provide insurance?
- Although uncommon, it's not unheard of. Some independent leasing companies can bundle together the cost of a lease with maintenance and insurance costs, often with asset protection and maintenance thrown in too.
What is included when leasing a car?
- Free UK delivery, manufacturer's warranty, full breakdown cover, road tax.