Lease car insurance

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Do I need lease car insurance?

While you don’t own a leased car, you’re responsible for making sure it’s properly insured until your contract ends. Lease agreements don’t typically include insurance, so it’s up to you to arrange the lease car insurance cover you need.

By law, your leased car must be insured before you drive it from the dealership or leasing office. If you previously leased a car, it’s worth checking if you can transfer the insurance.

This normally means paying an admin fee though, so it may be worth shopping around too.

Quick tip

You don’t need specialist car insurance for lease cars. Most standard car insurance policies can cover a leased car.

You just need to make the insurance provider aware that it’s a leased car to make sure your cover is valid.

What kind of lease car insurance do I need?

Lenders will usually want you to have comprehensive car insurance on a leased car from the day of delivery. This covers damage to your own and someone else's car if you're ever in an accident.

It could also cover the cost of replacing the car if it’s written off or stolen.

Whose name should be on the insurance policy?

It depends on the type of lease agreement you have.

Personal contract hire (PCH)

The person taking out the lease agreement must usually also be the main policyholder on the insurance certificate.

In some cases, though, the lease agreement holder may be listed as a named driver instead if their partner or spouse is listed as the policyholder.

    Business contract hire (BCH)

    A business lease car insurance certificate needs to be in the company or company director’s name.

      Does car leasing include insurance?

      Not usually. A few lease agreements include car insurance, and sometimes even routine maintenance, as part of a packaged bundle. But in most cases, you’ll need to arrange car insurance for a leased car yourself.

      Even if you do have the option to include car insurance when you lease a car, it’s worth doing your research to make sure you’re getting the cover you need at the right price.

      Your car dealer might offer insurance as an extra, and some lease agreements may include breakdown cover.

      But, again, you might find a better deal by comparing quotes, rather than sticking with what the leasing company offers.

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      How long does lease car insurance last?

      Comprehensive car insurance policies last for a year.

      If you’re only looking to lease a car short term (perhaps a few weeks or months), many insurance providers may still provide cover.

      But be aware that you may need to pay a cancellation fee to end the policy before the year is up. Or there may be an admin fee to transfer the policy to a new car.

      What is lease car GAP insurance?

      Contract hire GAP (Guaranteed Asset Protection) insurance is specifically designed for leased cars. If your car is written off, comprehensive car insurance can cover its current market value.

      GAP insurance covers the difference between this and the remaining payments on your contract.

      Compare the Market doesn’t currently provide quotes for GAP insurance.

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      What happens if I have an accident in my leased car?

      Report the accident

      As with any car, whether leased or owned, if you’re involved in a car accident, you should report it to the police in the first instance.

      Tell your insurance provider and leasing company

      Your insurance provider can walk you through the claims process.

      When considering repairs, bear in mind that there may be conditions on your lease agreement about how repairs should be carried out.

      It may be tempting to leave any minor damage as it is to avoid losing any no-claims bonus.

      However, if you return the leased car damaged, you could face penalties – and these could be higher than the cost of repairs.

      Get your settlement figure

      If your car is written off after an accident, the leasing company usually works on the basis that you’ll be buying the car and ending the lease agreement.

      They’ll give you a final settlement figure to pay off.

      Get your payout

      If you have comprehensive cover (which lease companies normally insist you have) your insurance provider could give you a payout that matches the current value of the car.

      That is, unless you have new for old cover included on your policy.

      If the lease car has depreciated, your payout may not cover your car lease finance agreement. If that’s the case, you would be expected to cover any shortfall yourself.

      Make sure you read your policy terms and conditions, as well as your leasing contract, so you understand what could happen in a worst-case scenario.

      How can I reduce the cost of lease car insurance?

      Do your research

      Cars are put into one of 50 car insurance groups based on factors like the car’s performance, engine type, and its safety and security features.

      The higher the insurance group your lease car is in, the more expensive the insurance tends to be.

      To see what group your lease car is in, use our car insurance group checker.

      Add an additional driver

      If you’re sharing some of the driving with a more experienced driver, adding them as a named driver to your policy could lower your premiums.

      Consider telematics insurance

      Also known as black box insurance, telematics insurance uses an app or device to monitor how well you drive. If you’re a safe driver, you could be rewarded with lower insurance premiums.

      Lease a cheaper car

      Expensive cars can cost insurance providers more to repair or replace if they're lost or damaged in an accident. Leasing a cheaper car could mean getting a cheaper insurance quote.

      Build up your no-claims discount

      If you drive safely and avoid making claims on your policy, you can be rewarded with a discount on your insurance premiums.

      Our research shows that people typically pay £822 a year for comprehensive cover with up to three years' no claims, compared to £1,611 with 0 years' no claims3.

      Pay annually

      According to our data, paying for your policy upfront could work out as much as £225 cheaper than paying monthly3. That's because monthly instalments tend to include interest charges.

      Park in a secure place

      Where you park at night can have an impact on your premiums. Our data shows that people pay around £772 less when they park on a drive instead of a street away from home3.

      Shop around

      Comparing your options is one of the best ways to find a policy that suits your needs and budget.

      So, why not compare insurance quotes with Compare the Market and see if you could find a great deal on your lease car insurance? Our simple comparison service could help you save as much as £4854.

      How much does comprehensive car insurance cost?

      Our data show that people usually pay

      £5935
      a year for comprehensive cover

      Lease car insurance isn't necessarily more expensive than insuring a car you own outright. Premiums can vary widely between drivers, but it usually depends on factors such as:

      • Your age and driving experience

      • The named drivers on your policy, if any

      • Your car's age, make and model

      • Where you live

      • How you use your car.

      5 51% of our customers were quoted less than £592.26 for their comprehensive car insurance in June 2026.

      What do I need to get a lease car insurance quote?

      Getting a quote through us is simples. We'll just need to know a bit about you and your car, and any named drivers you'd like to add to your policy.

      We'll then fetch you your personalised quotes from trusted providers in minutes.

      Start a quote

      Car finance and leasing guides

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      Check your car's insurance group and how it could affect your premium

      FAQs

      How do I organise insurance for my lease car?

      Taking out lease car insurance is more or less the same as taking out standard car insurance. But you’ll need to tell your insurance provider it’s for a lease vehicle and let them know the terms of the lease.

      You’ll also have to provide the name of the vehicle’s ‘registered owner’, which will be the finance company. And you’ll need to give details of anyone else who’ll be driving the car – a partner or spouse, for example.

      When do I need to insure my lease vehicle?

      You’ll need to have car insurance in place for the day of delivery. The car will only be handed to you once you have proof of insurance. Your car must then remain insured until the finance company takes it back at the end of the lease.

      Can I let someone else drive my leased car?

      Yes, your partner or children are allowed to drive the car you’ve leased, as long as they have a valid UK driving licence and are a named driver on your insurance policy.

      In most cases, the lease holder should be named as the main policyholder. But in a few rare cases the lease holder’s spouse or partner may be listed as the main policyholder, if the lease holder is a named driver.

      Is it more expensive to insure a leased car in the UK?

      It shouldn’t be more expensive to insure a lease car than one you’ve bought outright.

      Is it better to lease or buy a car?

      It boils down to your personal choice and financial circumstances. There are pros and cons to weigh up when deciding between buying and leasing. For example, some people like the idea of being able to change their car regularly, while others may prefer to own.

      Leasing may appeal to those who want a brand-new car but would struggle to pay for it upfront and don’t want to take out a loan. Others may not like the terms involved – like mileage limits – or not having anything to show for their money at the end of their agreement.

      Looking for something else?

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      Amy Rootham
      Reviewed 28 Aug 2026 byAmy RoothamInsurance expert

      Amy helps make sure you get the best value when choosing insurance. Thanks to more than four years’ experience at Compare the Market, she understands what people look for, working closely with insurance providers to offer you deals and services that are fair, easy to understand and right for your needs.

      Methodology

      1 Correct as of June 2026.

      2 Based on the % of respondents familiar with Compare the Market reporting they love the brand in the last 12 months vs. other leading PCWs. Source: Savanta BrandVue Financial Services, National Representative Survey of 9,772 respondents (June 2026)​

      3 Based on Compare the Market data in June 2026.

      4 Based on Online independent research by Consumer Intelligence during June 2026, 51% of customers could achieve this saving on their car insurance through Compare the Market.