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Car insurance for leased cars

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Lease car insurance

While you don’t own a leased car, you’re still responsible for making sure it’s insured properly, up until your lease contract ends. Insurance isn’t typically included with a lease agreement, so you’re legally required to arrange the cover. 

Do I need car insurance for my leased car?

It’s a legal requirement that you have car insurance for your leased car before you drive your car away from the dealership or leasing office. But before you take out a new policy, it’s worth checking if you can transfer any insurance from a previous lease car. This will likely incur administration fees, for changing the vehicle on the policy, so it may be worth shopping around too.

What kind of car lease insurance do I need?

You’ll typically need comprehensive car insurance for your lease car. This could cover you if you damage someone else’s car, as well as your own. It will also cover the cost of the car if it’s written off or stolen.

For personal contract hire (PCH) agreements, the person taking out the agreement must be the main policyholder – or a named driver on the insurance certificate.

For business contract hire (BCH) agreements, the insurance certificate needs to be in the company or company director's name.

How can I reduce the cost of my lease car insurance?

  • Do your research. Cars fall into different car insurance groups, one to 50. The higher the group, the more expensive the insurance tends to be.
  • Shop around. Comparing car insurance quotes three weeks before the policy start date could save you money. It’s typically the cheapest time to buy car insurance.
  • Add an additional driver. This can, in some cases, help to lower your premiums. If the additional driver is more experienced, your insurance provider might consider the overall risk to be lower.
  • Consider telematics insurance. If you’re a safe driver, you could be rewarded with lower annual insurance premiums.
  • So why not compare insurance quotes with Compare the Market and see if you could find a great deal on your lease car insurance? We can help you find quotes from a range of UK car insurance providers, with our simple comparison service.

Gap insurance for lease cars

Contract hire gap insurance is specifically designed for leased cars. It provides you full protection against theft or damage, with your normal car insurance covering the current value of the car, while the gap insurance covers you for the remaining payment costs on your lease contract. Compare the Market do not currently provide quotes for this type of insurance.

Frequently asked questions

During the COVID-19 pandemic, what should I do if my vehicle lease or PCP deal comes to an end while I am self-isolating or in lockdown?

The government has advised that before you travel, you should consider whether your journey is necessary. The advice is to stay local, if you can.

If your lease deal comes to an end and you’re unable to return your vehicle, or you’re struggling to meet the costs of your leasing agreement, you should contact your provider as soon as possible to let them know. They may be able to help you. On 14 May 2020, the Financial Conduct Authority (FCA) confirmed that firms would provide a payment freeze of up to three months to customers who are temporarily experiencing problems meeting finance or leasing payments, due to coronavirus. You can visit the FCA website for more details.

And there may be other  support available if you’ve been financially affected by the coronavirus outbreak. 

For more information on what to do if you’re leasing or under a PCP agreement, please check our coronavirus and motoring FAQ page. 

Please note: This information was correct at the time of publication on 13 May 2020, but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but also check GOV.UK for updates. 

Does my lease contract include car insurance?

Very few lease agreements offer car insurance as standard so, in most cases, you’ll need to arrange car insurance yourself. Even if car insurance is included, it’s worth doing your research to make sure you’re getting the cover you need, at the right price.

Your car dealer may offer insurance as an added extra but, again, you could find a better deal by comparing quotes, rather than sticking with what the leasing company offers.

Some insurance policies might offer breakdown cover as part of your package. But it’s worth checking whether your lease agreement already covers you for this.

How do I organise insurance for my lease car?

Taking out lease car insurance is the same as any other insurance product. But you’ll need to make it clear to your insurance provider that 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 the name of anybody else who’ll be driving the car – a partner or spouse, for example.

Is it more expensive to insure a lease car?

It shouldn’t be more expensive to insure a lease car than a car you’ve bought outright. However, because your lease car needs to be comprehensively insured, you won’t be able to potentially cut costs by taking out third-party insurance.

Read our guide, to find out more about the differences between buying and leasing a car.

What happens if my lease car is in an accident?

If your leased car is in an accident, or written off, one of the first things you should do is contact both your leasing company and insurance provider. The sooner you do this, the better, as most providers require you to contact them within an agreed period. Your insurance provider will then calculate what you are able to claim for, considering any excesses, based on the damage to the vehicle.

Unless you have taken out gap insurance, writing the vehicle off will provide you with a payout in line with the current market value of the car. With cars depreciating in value significantly, your base insurance will likely leave you short of the amount owed on your lease contract. Gap insurance allows you to cover the remaining payments on your agreement.

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