Lease car insurance

Q: Whose name should be on the insurance policy?

If you’re on a personal contract hire (PCH) or personal contract purchase (PCP) agreement, you’ll be named as the main policy holder. If the car is being leased through a business, the insurance policy will need to be in the company name or a director’s name.

Q: 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.

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Car insurance for leased cars

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 cover.

Do I need lease car insurance?

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 will probably mean paying an admin fee, so it may be worth shopping around, too.

What kind of leasing car insurance do I need?

You’ll typically need comprehensive car insurance for your lease car. This covers damage to someone else’s car, as well as any damage to your own. It could also cover the cost of replacing 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.

Does car leasing include insurance?

Few lease agreements offer car insurance as standard. 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 might offer insurance as an extra. But, again, you might find a better deal by comparing quotes, rather than sticking with what the leasing company offers.

Some lease agreements include breakdown cover.

What is lease car GAP insurance?

Contract hire gap 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 this type of insurance.

How can I reduce the cost when insuring a lease car?

Do your research when choosing a lease car. Cars fall into different car insurance groups ranging from car insurance group 1 to car insurance group 50. The higher the group, the more expensive the insurance is likely 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 to your policy could lower your premiums.
Consider telematics insurance. If you’re a safe driver, you could be rewarded with lower annual insurance premiums.
Shop around. Comparing car insurance quotes can help you find cheap deals on offer.

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 can help you find quotes from a range of UK car insurance providers.

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Frequently asked questions

How do I organise insurance for my lease car?

Taking out lease car insurance is the same as taking out any insurance product. 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’. This will be the finance company and the name of anybody else who’ll be driving the car – a partner or spouse, for example.

Whose name should be on the insurance policy?

If you’re on a personal contract hire (PCH) or personal contract purchase (PCP) agreement, you’ll be named as the main policy holder.

If the car is being leased through a business, the insurance policy will need to be in the company name or a director’s name.

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 part-exchange when I lease a car?

No, you won’t be able to part-exchange your old car for a leased car.

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.

The leaseholder should always be named as the main policyholder.

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.

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

As with any car, whether leased or owned, if you’re involved in a car accident, you should report it to the police. You’ll also need to let your insurance provider and leasing company know as soon as possible.

If your car is a write-off, your leasing company may want you to pay off the remaining balance or charge a damage fee.

Depending on your cover, your insurance policy might pay out. This could help cover the lease, or even provide a replacement vehicle if you have ‘new for old’ car cover.

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

Is it better to lease or buy a car?

It boils down to your personal choice and financial circumstances. Here’s a quick recap of the pros and cons of leasing:

Pros of leasing a car

You may be able to choose a more prestigious car that could otherwise be unaffordable.
Once the lease is up, you simply hand back the car or take out a new lease.
As the leasing company legally owns the car, they’re responsible for paying road tax. However, if the cost of vehicle tax increases during the lease agreement, you’ll be liable to pay the difference in price.
Depending on the terms, your leasing contract might also cover maintenance and servicing.
Lease payments are tax deductible.
You won’t have the hassle of selling a depreciated car once your contract is up.

Cons of leasing a car

You’ll never own the car outright.
Lease arrangements come with a mileage limit.
While leasing companies allow for some wear and tear, any significant damage will need to be paid for from your own pocket.
You can’t make modifications to the car.
You’re tied into a contract and if you want to leave early, will probably be charged an early termination fee.

Not sure which option is right for you? Read our guide to the differences between buying and leasing a car.