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Lease car insurance

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1Correct as of March, 2024

Do I need car insurance for my leased car?

Yes. Even with a lease car, it's still a legal requirement to have car insurance in place before you can drive on the road.

Don't assume your car has insurance just because it's leased. Most lease agreements are unlikely to include car insurance, so you'll need to arrange it yourself.

You'll also need to make sure you have a policy in place for the full duration of your contract.

What type of insurance do I need for my lease car?

You usually need to have comprehensive car insurance for a leased car. This is a preference from the lease company, because it ensures you're covered for damage to your own car, in addition to third-party damage. Third party insurance policies only cover damage done to someone else's vehicle.

You can enhance your comprehensive cover to suit your needs when you get a quote. Choose whether you need social only, cover for commuting or using your car for work, and add extras such as breakdown cover, no-claims bonus protection and courtesy car cover.

If you have a business lease agreement or business contract hire, you may need business car insurance. You can compare quotes for this as you normally would. When you get a car quote, select 'business use' when we ask "what will the car be used for?"

How do I get an insurance quote for my lease car?

Getting a quote for a leased car is just the same as getting insurance for a car you own. You'll need to enter your personal details, and details about the car. The only difference is selecting who the car is registered to, and who owns the car.

The registered keeper of the car will be the person or company named on the V5 registration document. The registered keeper and registered owner aren't always the same person.

The registered keeper of the car is likely to be the leasing company.

What our expert says

"Most lease agreements include an annual mileage limit, which is typically around 10,000 a year on average. Make sure you set your mileage accurately to match the leasing contract when you get your quote. If you go over your agreed mileage you may face extra charges from your leasing company."

Louise Thomas, Motor Insurance Expert at Confused.com
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Compare car insurance quotes for your leased car

How much does it cost to insure a leased car

Our data shows the average cost to insure a privately leased car is £530*. Insuring a lease car shouldn't be any more expensive than a car you own. The cost of car insurance is based on a range of factors such as location, age and occupation - not the registered owner.

For more information on what affects the price of policies, read our guide on how car insurance is calculated.

*Based on median prices for privately leased cars Nov 22 - April 23.

Am I covered if I have an accident in my leased car?

Comprehensive insurance should provide the cover you need if you have an accident in your leased car. You should report an accident straight away, just like you would if you had an accident in a car you owned. Here's what to do:

  • Report the accident to the police
  • Notify your insurance company
  • Contact your leasing company

Your insurance company will assess the damage. If the car is deemed a write-off, the leasing company ends the agreement. They'll agree a settlement with your insurance company, who'll pay the current value of the car.

In some cases, the amount agreed by the insurer might fall short of the total cost owed to the lease company. If you have Guaranteed Asset Protection (GAP) insurance, you're covered for the difference between the current market value and the amount owed to the lease company.

Do I need GAP insurance for my lease car?

A GAP insurance policy can help bridge the gap between the value of the car and the amount the insurer pays out if your car is written off.

If your leased car is stolen or declared a total loss following an accident, insurers only pay out the current market value of the car. If this is less than the outstanding finance on your leasing agreement, you're left paying the difference.

There are 3 main types of GAP cover suitable for leased cars:

  • Contract hire GAP insurance
  • Vehicle replacement GAP insurance
  • Return to invoice (RTI)
  • Contract hire GAP insurance pays the difference between your hire car insurer’s settlement sum and the outstanding finance owed on the car.
  • Vehicle replacement GAP insurance is a more comprehensive and typically more expensive form of protection. This cover option pays any outstanding finance owed on the lease deal. It also pays for a replacement vehicle of the same specification, age and mileage as the one that needs replacing.
  • Return to invoice (RTI) is suitable for cars that were leased brand new. It pays the difference between the insurance payout and the original value of the car. If your car is declared a total loss, the difference between your insurer’s payment and the cost of your vehicle when you bought it is covered, including any outstanding finance.

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Need more help?

Is breakdown insurance included with lease car agreements?

Breakdown cover is often included with new lease car contracts, but it depends on the deal you choose. There may be limitations on the level of cover included, so it's worth checking you have the right cover that suits your needs.

You can compare breakdown cover with us and buy a stand alone policy if it's not included in your lease agreement.

Can someone else drive my leased car?

You can add drivers to your car insurance policy on a lease car, allowing them to drive you car. But the main driver must be listed as the policyholder, otherwise you may be accused of fronting, which is a type of insurance fraud. 

Drivers who aren't named on your policy may still drive your lease car, providing they have their own insurance policy with driving other cars cover included. Just bear in mind that most policies will only allow drivers to drive other cars in an emergency. So be aware of exactly what you're covered for before getting behind the wheel.

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Page last reviewed: 01 February 2024

Reviewed by: Louise Thomas

After buying car insurance, 96% of Confused.com customers would recommend us (based on 157737 Reviews.co.uk respondents - as of 13/10/23). Read our reviews