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 it’s up to you to arrange the cover.

Do I need car insurance for my leased car?

By law, you must have car insurance in place for your leased car before you drive it 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. You’ll probably have to pay an administration fee 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.

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.

What is Guaranteed Asset Protection (GAP) insurance for lease cars?

Contract hire gap insurance is specifically designed for leased cars. It gives you full protection against theft or damage; your normal car insurance covers 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.

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

  • Do your research. Cars fall into different car insurance groups that range from 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. A premium is the amount you pay annually or monthly for an insurance policy. 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.

Frequently asked questions

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

The government has advised that, during lockdowns, you should consider whether your journey is necessary before you travel. The advice is to stay local, if you can. If you’re self-isolating, you must stay at home.

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. 

In November 2020, the Financial Conduct Authority (FCA) outlined guidance to extend support available to car finance customers. Under the plans, people who have not yet had a payment freeze will be able to ask for one for up to six months. Customers whose payments have already been frozen will be able to request a second payment holiday as long as the deferrals last no more than six months in total. 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 as of January 2021, but, because of the impact of COVID-19, things are changing rapidly. Check GOV.UK for updates. 

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 one 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’re able to claim for, considering any excesses (the amount you pay towards any claim you make), based on the damage to the vehicle.

Unless you’ve taken out gap insurance, writing the vehicle off will provide you with a payout in line with the current market value of the car – what it would sell for now on the open market, not its original value. With cars depreciating in value significantly, car insurance will likely leave you short of the amount owed on your lease contract. Gap insurance could cover the remaining payments on your agreement.

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 meet certain conditions. They must have a full valid UK driving licence and be a named driver on your insurance policy. The leaseholder should always be named as the main policyholder.

How much does comprehensive car insurance cost?

10% of customers could pay £244 for comprehensive car insurance* 50% of customers could pay £622 for comprehensive car insurance**

 

**10% of people could achieve a quote of £243.59 per year for their fully comprehensive car insurance based on Compare the Market data in November 2020

***50% of people could achieve a quote of £621.08 per year for their fully comprehensive car insurance based on Compare the Market data in November 2020.

Start a quote

What do I need to get a car insurance quote for my leased car?

Getting a quote is simple. Just give us a few details about you and the car including:

  • Your personal details
  • The car registration
  • Your no claims discount
  • Any additional drivers
Start a quote

Dan Hutson

From the Motor team

What our expert says

If you haven’t had a leased car before you might think all the paperwork is sorted out when you get it. This isn’t the case for car insurance, so make sure you’re fully covered before you drive your car away.