How Does Insurance Work With Leasing a Car?

How Does Insurance Work With Leasing a Car?

Leasing has emerged as a popular alternative for individuals who either cannot, or prefer not to, purchase a car outright. This flexible option avoids the need for a large upfront payment, instead allowing for manageable monthly payments over a period of two to four years. Additionally, leasing can significantly broaden your choices when selecting the ideal vehicle. However, it's important to understand how insurance works with leasing a car, as this process is different from insuring a car you own outright. 

While leasing a car is typically a straightforward process, you are not the official registered owner of the leased vehicle. This unique aspect of leasing often raises questions, particularly regarding insurance. To help clarify this, we've created a comprehensive guide that explains in detail how insurance works with leasing a car. In this guide, we address the most frequently asked questions related to insurance and car leasing, offering peace of mind and clear guidance for potential lessees.

Does car leasing include insurance?

Many people get a bit confused as to where the responsibility lies with insurance and car leasing. Every vehicle on UK roads requires insurance by law, and this goes for lease cars too. But people are sometimes unclear about whether lease cars come with insurance or not.

As the lessee, you are responsible for taking care of the insurance for your car. It is uncommon for leasers to include insurance, however, it is always worth asking if you are still unsure, as they may be able to guide you in the right direction. Providers can also offer different packages that include insurance for an added cost.

How do I approach insurance when leasing?

When you buy insurance for your vehicle, you will need to let your insurer know that it is a lease car. Although the leasing company is the registered keeper and owner of the car, the policy holder will be different. The name of the policy holder will also depend on whether it is a personal leasing deal or a business leasing deal.

For a personal leasing deal, the driver signing the lease must either be the main policy holder or a named driver. However, for a business car lease, the company name or director’s name will typically be the one on the insurance policy.

What should I look out for when comparing insurance providers?

It is a really good idea to shop around for your preferred insurance provider, just as you would if you owned the vehicle.

Added extras such as breakdown cover, third party insurance, windscreen repair and courtesy cars can all be added to make life easier if you do get into a scrape.

What kind of insurance policy will I need?

When leasing, it is recommended that you cover yourself with a fully comprehensive insurance policy that offers maximum protection. Most insurers allow you to pay monthly or in one lump sum – whichever suits your financial circumstances.

Most people opt for fully comprehensive insurance, since this will cover you for drivers and damage with other cars as well as your own. If your car is written off, this insurance will provide you with compensation of the car’s current value too. This will also mean you will only have to pay the excess charge and it will protect you from unexpected bills.

There are certain things you need to be mindful of with your leasing car. After the leasing period your car should be in full working condition when returned. In addition, other than expected depreciated wear, the car is also expected to be returned looking as new as when it was first leased.

When will I need to take the insurance out?

Insurance will need to be arranged and secured before the delivery date of your leased vehicle for the day it arrives until the day it is returned.

If your insurance starts after the car’s arrival date, you will be unable to drive it legally until the insurance date, so it is crucial that you get the dates right.

What should I do if my lease car gets into an accident?

If an accident occurs when leasing your car, damage that is covered by insurance needs to be carried out to their specifications. You would need to ensure that you inform your leasing company / finance provider.

If your lease car is written off or stolen you must contact your finance provider immediately and written confirmation on the status of your vehicle from your insurers will be needed before it provides an amount for the settlement of the vehicle contract.

Motorfinity Leasing has more details about our car leasing offers here.