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Lease car insurance

Insure a leased car

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Why should I compare car insurance quotes for leased cars?

Like anything else in the car insurance sector, it’s important to start your journey by comparing the different policies on offer.

You may be hoping for a top-quality new car, be it a Bentley or a Tesla. But truthfully, these are expensive cars to keep on the road. For this reason, you should always check how much it’ll cost you to insure a potential new car before signing any lease contract.

How does leasing a car work?

Car leasing is just like a long-term car rental. You make an up-front payment, which is a deposit ahead of monthly payments. In return, you get the use of, very often, a brand new car

At the end of the lease period, you return the car to the dealership. You can then either start a new lease on another car, buy your current vehicle or walk away.

Does car leasing include insurance?

Leasing is a great alternative to buying your own car, but certain legal stipulations still apply.

You can’t drive on public roads without car insurance, which is your responsibility to arrange. So, before all else you’ll need to check how much you’ll pay for cover. This is as important a consideration as what car you want. After all, you could find your desired model is way too costly to insure.

How do I get insurance for my leased car?

Leasing firms typically require you to buy comprehensive car insurance. This isn’t a bad thing, because fully comp cover can actually be cheaper than third party, fire and theft or third-party insurance. It might seem counter-intuitive, but if you think about it, this makes sense.

Anyone who really cares about their driving responsibilities will search for the best cover available, whereas those looking to cut corners won’t. Insurers know this and are less likely to reward potentially risky customers with their best deals.

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Is breakdown insurance included with lease car agreements?

While your lease dealer probably won’t pay for your car insurance, they may pay for breakdown cover. If this seems like a good deal, bear in mind that the insurance policy you buy may include this cover as standard. But you can only claim on one kind of protection, not both.

How much does it cost to insure a leased car?

A car is a car. Some are more expensive to cover than others and insurers won’t discriminate between bought or leased vehicles. What’s more important is how you go about insuring your new car. You should invest some time and effort into shopping around for the best cover.

You should, of course compare prices with us, but also speak to friends, family and colleagues, if you’re looking for a new car. You may find the specific model you’re set on costs a whole lot more than a similar one to insure.

If you’re a young driver and looking to insure a lease car you may find insurance costs rather alarming. Telematics, or black box, car insurance may prove cheaper, as you’ll be rewarded for better, safer driving with lower prices, however you may have to check with the leasing company that it’s ok to install a black box in the car, as some insurers will opt for a professional installation rather than a self installed device. You can find more tips to save on your car insurance in our guide.

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Does it cost more to insure a leased car?

It shouldn’t cost any more to insure a leased car than it would for one you own. After all, your behaviour behind the wheel won’t change just because you don’t own the car. Besides, the chances are you’ll be driving a motor that’s new, and in peak condition. It’ll invariably have all the mod cons, such as parking sensors and dashcams, meaning you have a range of safety functionality at your disposal.

Does car leasing include VED?

Quite often yes. A leased car or vehicle will commonly have Vehicle Excise Duty as part of the deal or lease agreement. In any other case the registered keeper of the vehicle is always liable to pay for and arrange this, for instance in a private or trade sale. Technically leased vehicles don’t belong to the person leasing but to the finance company. While this is often included within many lease agreements, it’s always important to check, as if it’s not, you will be liable. A good dealer or company should point this out for you when going through the agreement.

Do you need GAP insurance on a leased car?

Guaranteed Asset Protection, or GAP insurance, isn’t a legal requirement, but it’s worth thinking about. If the car is stolen or written off, insurers will only pay out the market value of the car. That means you could be left out of pocket if the value of the car is less than the outstanding finance on your leasing agreement. A GAP policy can help bridge the gap between the value of the car and the amount the insurer pays out.

Given the likely high value of a new or relatively new car, this outlay could soften the blow should the worst happen. It’s also worth noting that a Freedom of Information Act request submitted by Rivervale Leasing in 2020 revealed 56,288 lease cars were targeted by thieves. That’s one stolen every nine minutes.

There are two main types of GAP cover – both of which are worth considering, especially if you’ve opted for a premium-value car:

  • Return to invoice (RTI)
  • Vehicle replacement GAP insurance
  • Return to invoice (RTI)

Contract hire GAP insurance is a straightforward type of cover that pays the difference between your hire car insurer’s settlement sum and the outstanding finance owed on the vehicle.

Vehicle replacement GAP insurance is a more comprehensive and therefore typically pricier form of protection. This cover option will pay 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 pay-out 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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