There might be a scenario in which you want to lease a car for somebody else. This isn’t a problem and is something that quite a few people end up doing, be it for their partner or their child or even their friend.
The only problem is the issue of insurance. Can a lease car be insured in someone else’s name other than yours?
In this article, we look at whether insurance is included in a lease contract, whether you can lease a car and insure it in someone else’s name, and whether you need a certain type of insurance on a lease car.
Is insurance included in my lease contract?
This is a question we get quite often and the answer is usually no. Generally, insurance is not included in the price of a lease contract, sorry.
Your vehicle broker may have relationships with insurance companies which means you can do your insurance through them but you’ll be paying them separately. Some people prefer this because it’s easier and it saves them shopping around. However, it should be noted that this doesn’t always mean you will get the best deal on your insurance.
Also, make sure that your vehicle broker is qualified to talk about insurance as not all of them are. You have to have a separate FCA regulation to do this, so double check before they start discussing insurance. They can advise, which is what we are doing now, but they can’t try and sell you any.
So no, insurance isn’t included in your lease contract. You will have to pay for that separately. We recommend shopping around so you can get the best deal. You can read our article on whether online insurance quotes are accurate here.
Can a lease car be insured in someone else’s name?
As we mentioned before, there may be a time when you want to lease a car but you will not be the one driving it. That is, the finance will be in your name but the insurance won’t be. Is this possible?
At the time of writing, the person whose name is on the finance would usually have to be the policy holder. This is because the person who is paying for the car is the one with the financial interest in the car, so they should also hold the insurance policy.
There might be a scenario in which some insurers may allow someone else to be the policy holder but that doesn’t apply to all insurers and some won’t allow it.
Unfortunately, that’s how it is at the minute. So if you lease a car then you do have to be on the insurance and you, usually, have to be the policy holder.
However, it isn’t all doom and gloom. Just because you’re name is on the policy, does not mean that you have to be the main driver. The policy simply has to be in your name, you don’t have to drive it. In fact, you don’t have to drive it at all you just have to have the policy in your name.
You can change the name of the main driver on your insurance policy no problem. This means that your child, your spouse, your friend or employee can drive the car 100% of the time.
However, when changing the main driver make sure you read everything before you sign. It can get pretty confusing with the whole main driver/named driver thing so make sure you have changed the right thing and you understand it before you sign.
What is the difference between the main driver and the named driver?
The difference between the two is pretty important, so it’s vital that the information is correct otherwise you could end up in hot water.
The main driver is the person that will be driving it most of the time. The named driver is the person who will be driving it every now and again but not all the time. Because the named driver won’t be driving it as much, they are not as much of a risk. The less they drive it, the less likely they are to have an accident and so on. This means that the insurance for them will be lower.
If the two are mixed up and the named driver is actually the main driver (and the other way round) then, whether you mean to or not, you are committing insurance fraud.
So, it’s vital that you make sure you have the names the right way round.
If I insure someone else on my lease car, who gets the no claims bonus?
Now, there is an issue of the no claims bonus.
Usually, the policyholder is the one that builds up the no claims. However, there are some insurers that will take into account that the main driver isn’t necessarily the policy holder so they will still be in with a chance of a discount without being the policyholder. Though not all insurers do this, and it’s up to the discretion of the company.
In terms of married/spouse no claims bonus then this is what could happen. It should be noted that not all insurers do this and it’s generally something you have to ask for.
If you or your spouse has gone five years without making a claim and the name driver wants a new car, the no claims bonus can be transferred to the policy despite the no claims bonus not being in their name.
After one year, they can keep the discount on the policy but then they will only have one year no claims.
As we said, this isn’t something that insurers offer and it is something that you will have to ask for.
What insurance do I need for a lease car?
When you get a lease car, you can’t get standard third party insurance, it has to be fully comprehensive.
Because you are leasing the car, you don’t own it, which means the financial interest doesn’t lie with you. It lies with the finance house. So, while we don’t think this will happen, you could end up taking less care of it because you can just hand it back at the end. And because of this, finance houses need you, and everyone driving the lease car, to have fully comprehensive insurance.
This applies to all lease contracts. Even if you are getting a contract purchase with the intention of owning it at the end, for the time the finance house owns the car you have to get fully comprehensive insurance. This is because you haven’t guaranteed you will buy it at the end and you don’t physically own the car. Therefore, you are at higher risk of treating it poorly. While we’re sure you won’t, insurers have to be cautious.
So that’s it really. As it stands, a lease car has to be insured by the person who has the contract. However, the policy holder doesn’t have to be the main driver so this issue is easily solved. Remember though, the name driver and the main driver are two different things and it’s vital you get the two the right way round on your insurance properly, as you could get in a lot of trouble.