Does Car Leasing Include Insurance?

17th Sep 2021

Does Car Leasing Include Insurance?

There are no two ways about it – driving comes with its fair share of payments. From finance payments on owned cars to road tax, fuel and insurance, it soon adds up. That’s why car leasing offers a great, cost-effective alternative.

What’s included in a car lease?

The best thing about leasing a car is that you’ll have all the benefits of a shiny new vehicle without the eye-watering costs. You simply agree a rental term, pay a deposit and then commit to monthly payments until the contract is up. This agreement generally includes:

• A new vehicle with a manufacturer’s warranty

• A mileage agreement

• Road tax (for personal leases – business leases can be subject to company car tax)

• Optional maintenance e.g. servicing and tyre repairs

Your agreement will not include fuel, nor will it usually include insurance. However, there are options if you’re willing to pay more.

Insurance options for leased cars

You may be able to negotiate an insurance package with your broker. This can be cost-effective if your lease agreement is for more than one year, as your premiums will not go up year after year like they would with a third party. Likewise, it can be helpful if you do have an accident – you will spend less time chasing a third-party insurer.

Note that third party insurance – that which only covers damage to other cars – is not available with leased cars. Likewise, it’s rare to find third party fire and theft deals.

Instead, you’ll likely have to opt for comprehensive insurance, which covers all of the above plus damage to the car you’re driving. These can also offer added benefits like breakdown cover.

What do I need to qualify for insurance with a leased car?

To qualify for a bolt-on insurance deal, you must:

• Be between 21 and 67 years if age

• Have held a valid UK licence for 12 months+

• Have no more than six points

• Have no more than two claims/accidents in that last two years

• Have not been declared medically unfit by the DVLA

• Be the lessee or lessee’s spouse/partner (personal hire)*

• Be an employee of the lessee (business hire)*

*Note that additional drivers are subject to all of the above conditions e.g. medical history and endorsements. If you want to insure a driver who is not a spouse or an employee, you may have to ask a third-party provider.

Is it more expensive to insure a lease car?

It can be more expensive to insure a lease car, mostly because you’ll have to opt for fully comprehensive insurance. However, just like you would an owned car, you can reduce the cost by having a no claims discount and driving safely, or storing the car in a statistically safer area. In some cases, you might even find it’s cheaper if your current provider likes to up their premiums!

Get the best deal today

Whether you’re looking for business or personal contract hire, we can help you choose the best deal for your contract length and mileage needs. Contact us here.