Lease car insurance

If you’ve always ogled after the latest model of car, daydreaming about driving one around town (but knowing you also need to meet your mortgage payments) then we bring you good news. With a lease car, you can choose any make or model of vehicle you want to drive and you can. Yes, really. A payment plan will be arranged and you’d pay for the car in instalments whilst you lease it from a company.

The lease agreement for the vehicle is for a certain length of time, usually 2-5 years and up to an agreed limit of mileage. You’ll put down a few months up front as a deposit and then your payments will start. So, you pay a fixed monthly, much more affordable fee to have run of a seductive new car. You do have to give it back at the end, so there won’t be the resale perk that’s associated if you own your car outright, but by that time you’re looking for a shinier new vehicle anyway, right?

Yes, you do. It’s illegal to drive without insurance in the UK – no ifs or buts. Therefore, you’ll need to get insurance for a lease vehicle, whether you find a policy yourself or it’s sourced via your work through a business partnership. And what level to get? We would always, always (did we say always?) recommend getting comprehensive cover because the vehicle isn’t actually yours: you’re borrowing it.

If you have a policy that isn’t wholly comprehensive, then you could find yourself having to pay a huge sum in the event of an incident, all for a car that isn’t even yours and you need to hand back. It’s like renting a house, spilling a drink on the floor and having to pay for new carpets… all at the end of your tenancy.

Critically, insurance isn’t ordinarily included in your monthly payment plan, so first things first: when you’re doing the sums on what’s affordable, remember that you’ll be paying for insurance on top of this so think about whether a lease car is the best option for you.

Some leases may include insurance as a combo package; a neat little bundle, if you will. The pros of this are that you’ll know each month that everything’s been paid and covered for, and in the event of a claim being brought about all matters will be handled directly by the leaser, rather than waiting for a third-party insurance company to get involved. This can be an attractive choice to some drivers, but we recommend doing your research: you may not be getting the best deal around.

Instead, you can purchase lease car insurance yourself and the process is no different to the usual: you’d just need to inform your insurance company that you’re driving a lease vehicle. Rather than being bound by the insurance package provided by your financier, instead you can shop around to get a cheaper car insurance quote which could save you money. You’ll just need to ensure you’ve got the level of cover required by the leasing company to be compliant with their terms and conditions.

That depends on a few factors. Sometimes short-term premiums cost a lot more, but as leases cars are usually leased for 2-5 year periods you don’t have any restrictions on your search. So, in this respect it’d be similar to finding car insurance for your own vehicle.

Where you might face higher costs though, is in the level cover you’re after. As we mentioned, most lease companies will insist you have comprehensive cover, which could be considerably more than you would pay on a third party policy. And most companies won’t even offer a third party policy; the minimum would likely be third party, fire and theft – this is because, remember, the vehicle belongs to them and in the event of a fire or theft the financier could be compensated for the loss of their property. They’re protecting themselves.

If you do opt for a combo deal, just be aware that you may find yourself facing a higher premium than if you find a policy yourself. You can use our car insurance comparison tool to find the best deal for your leased car.