Does car leasing include insurance?

Every car on the road needs insurance to stay within the law. When you take out a lease deal on a car, you’ll need to know if it comes with insurance or if you need to arrange cover yourself.

Before taking on a personal lease or any kind of car finance deal, it always pays to find out who sorts out the insurance – you or the finance company. If you have to sort insurance, which is likely, it will add to your expected outgoings and could make the car itself less easy to afford. Here’s all you need to know about lease car insurance.

Does car leasing include insurance?

When you hire a car for a week or two on holiday, it comes with insurance wrapped up in the price. With a car lease deal, insurance is usually not included, so you have to arrange cover yourself.

If your lease car is organised through the company you work for, insurance should be arranged by the business. You still need a letter or copy of the insurance policy to prove this to the police if required or in the event of an accident when you need to swap insurance details with another party.

With a car lease deal, it’s up to you to sort insurance. This is the case even though the finance company providing the lease deal is the legal owner of the car – you are known as the “hirer” as the car’s main driver, and need insurance to drive on the road legally.

When taking out a lease deal, it’s always worth asking the company if insurance is included in leasing a car. A small number of lease deals come with insurance included, and many bundle up maintenance and servicing with this too. That offers a simple single monthly payment for all your motoring costs other than fuel but these deals are the exception. Normally, insurance is not included. 

What insurance policy do I need when leasing?

It’s best to check with the lease company what type of insurance they expect you to have. They are the legal owner of the car, so they can insist on the type of insurance and most require comprehensive cover.

The good news is that comprehensive insurance gives you, and the lease company, the best protection in the event of damage to the car, other vehicles or third parties involved in any collision, or If liability for any damage cannot be proven. In the worst case, all you will have to pay is the excess – an agreed small sum to cover the first part of any repair bill.

One other bit of good news is that insuring a lease car should not cost any more than getting cover for a car you own outright. The insurance company is more concerned with how much of a risk you present and the type of car being insured than who owns it. If you want to reduce your lease car insurance costs, consider a less expensive car that sits in a lower insurance group – these groups run from 1 to 50, with 50 the being highest for pricey cars that cost more to fix if there’s a claim.

Importantly, you must tell the insurer the cover is for a lease car when you take out the policy.

What’s included in fully comprehensive car insurance?

A comprehensive policy usually comes with breakdown cover, windscreen repair, a courtesy car while your car is being fixed, and legal cover to deal with any claims. It will also provide accidental damage protection to your car, such as if a tree branch falls on it.

Personal injury cover is another key part of comprehensive car insurance as it covers you and others if they are hurt in an accident.

Comprehensive cover is the best option, even if Third Party cover seems cheaper. This is a false economy as Third Party will only cover injury to the other driver and damage to their car – not yours. It may even be more costly than a comprehensive policy.

Lastly, and in the worst case scenario, comprehensive insurance will pay to replace your car if it’s damaged beyond repair - ‘written-off’ as an insurer would call it, stolen, or gutted by fire.

It’s also worth remembering that comprehensive cover is not an excuse to treat your car badly. If you damage it through negligence, bad driving, or taking it off-road, you won’t be covered. Nor will you be covered if you use it without a valid driving licence.

Can I get a car lease with insurance included?

While most insurers will cover a lease car, most lease deals do not come with insurance included. It’s always worth asking if it can be, though, as it means one less thing for you to think about and no searching for the best premium.

Finding a combined lease and insurance deal is harder, but it can help you plan your monthly outgoings more carefully. It also costs the same each month for the duration of the lease contract, so no insurance premium rises from one year to the next.

A less obvious benefit of combining your lease and insurance deals is the lease company may look after any repairs and claim for you in the event of an accident.

With a combined lease and insurance deal, you get all the same protections as any other comprehensive cover. This means you will enjoy breakdown cover, windscreen protection, legal cover, and GAP insurance to cover the difference in what your car is worth if it was brand new and the value given if it’s written off or stolen.

Just check that any lease-plus-insurance deal is actually more cost effective than just leasing the car and getting insurance yourself.