Insuring A Leased Car
Leasing a car is becoming an increasingly popular option. It gives customers better flexibility to change their vehicle more frequently as most leases are taken out over two to three years. It also allows people to access a brand new car that they would not be able to afford outright.
What’s more, leasing is a relatively straightforward process with the majority of car ownership costs like delivery, manufacturer’s warranty, breakdown recovery and road tax, rolled into a monthly payment. However, most lease deals do not include insurance, so this is something you must organise yourself. We’ve taken a more detailed look at how to go about insuring a leased car and some of the things you need to consider when insuring a personal lease car.
In the UK it is a legal requirement to have appropriate motor insurance, regardless of whether you own or lease the car. Driving a car without insurance is illegal and can result in points on your licence, a hefty fine and even a driving ban.
Is insurance included in my lease contract?
In most cases insurance is not included in your lease contract and is something you need to organise separately. Most lease companies require you to take out fully comprehensive policy in the name of the hirer obtaining the lease deal. This ensures that if you are involved in an accident they can still recoup the cost of the vehicle.
If you only have third party insurance you will be liable to cover the cost of repairs should the car get damaged or be written off.
When should my insurance start?
Most lease companies require you to have insurance in place on the day, or before the day of delivery. The delivery driver is usually required to check that you have suitable insurance before leaving the car with you and will usually ask to see your insurance certificate showing your name, the car registration and the correct start date on.
We recommend sorting your lease car insurance as soon as the lease company has contacted you to organise a date for delivery and confirmed your vehicle registration. This way you can get prepared and should have enough time to shop around for the best deal.
Do I need to send you copies of my insurance certificate?
Many leasing companies are happy to see a copy of the insurance certificate when they drop the car with you. However, some companies will request you send proof of insurance prior to delivery being attempted. This can prevent unnecessary time being wasted if the right insurance is not in place when delivery is attempted.
It is a good idea to double check this with the lease company before delivery.
What about GAP insurance?
GAP insurance is not legally required but is an optional extra which can give customers added peace of mind.
GAP insurance covers the difference or ‘gap’ between the value of the car and the amount you owe to the finance company for leasing the vehicle.
For example, if you leased a car with a ‘new price’ of £20,000 and have an accident two years later, the value of the car may have fallen to around £16,000. If the car is written off or suffers extensive damage you are left with this shortfall to pay. This can put a real strain on your finances if the car needs to be replaced and you’re still paying for it.
Depending on your circumstances and the likely depreciation of the car you have leased it may be worth considering GAP insurance. However, GAP insurance is optional, and it is completely down to you whether you decide to take it out or not.
How can I make my insurance less expensive?
Insurance for leased cars works in the same way as for private cars. This means there are numerous steps you can take to try and reduce the cost of insuring a leased car.
1. Check Car Insurance Groups
Before signing the dotted line on a lease agreement, make sure you have checked what car insurance group the car will fall into. Leasing is often an affordable way to get a new car, but you still need to bear in mind insurance costs.
High powered more expensive cars cost more to insure. So before stretching your budget, do your research and make sure you are comfortable with the outlay you are making.
2. Add an additional driver to the policy
Adding a second experience driver to the insurance policy can help to reduce the cost of the insurance as your perceived risk is reduced which reduces your premiums.
However, don’t forget that for a lease vehicle, the hirer who is obtaining the finance must be the main insurance policyholder.
3. Pay annually
As with any insurance, when you pay monthly, you are usually charged interest on the payments. So paying for car insurance in one lump sum can often save you money in the long run.
Initially, this may seem like a big outlay, however, if you can put aside a set amount each month you should find it easier to pay the full cost every year.
4. Shop around
Again like with any insurance it pays to shop around. Use comparison websites or phone a few different providers to find the best lease car insurance deal for you.
5. Increase the excess
Another way to reduce your insurance is to increase the excess amount you pay. Be aware though that you should only increase the excess to an amount you are comfortable paying in the event of an accident.
Now that you are equipped with all the knowledge you could need on insuring a personal lease car, why not check out our current leasing deals?
We stock a variety of cars from compact city cars to stylish SUVs, all from best-selling car manufacturers, so we’re confident that you’ll discover the perfect lease car for your requirements.
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