How does leasing affect car insurance?

Why does leasing affect car insurance?

If you’re looking to get a lease car, then you need to think about insurance.

Insuring your lease car is one of the biggest extra costs when it comes to cars, whether you are leasing or buying.

But, does leasing affect insurance? And if it does, how?

Before we begin, we should note that we are not insurance brokers. Therefore we are not experts. If you are in any doubt about insurance we recommend going to an insurance broker. We can, however, give our opinion. And, we inform our customers of that opinion every day. Which is why we’ve decided to write an article on how leasing affects insurance.

What affects the price of car insurance?

Firstly, what affects insurance price in general? There are loads of things that can affect the price of insurance. Some of the things that affect the price are;

 

  • The type of car
  • Where you live
  • Your age
  • The amount of driving experience you have had
  • Extra qualifications – such as the pass plus scheme
  • Criminal convictions
  • Driving convictions
  • Penalty points

 

As you can see, there are a lot of things insurance companies take into consideration before they determine the cost of your insurance.

How does leasing affect car insurance?

The only way leasing affects insurance is that you have to get a certain type of insurance.

When you lease a car, you have to get fully comprehensive insurance. You can’t get third party or third party fire and theft; it has to be fully comprehensive.

Fully comprehensive insurance covers your car for pretty much everything. It’s one of the highest forms of cover for your vehicle. Third party or third party fire and theft only covers damage to others as a result of damage that was your fault. Any damage to your car is your own problem. However, fully comprehensive covers the damage done to your car as well.

This is the case for every lease contract. In your contract, the finance house should stipulate that you need to have fully comprehensive insurance, as does everyone else driving your lease car.

Can someone else be insured to drive my lease car?

Yes, they can. There are some conditions, however. They must;

 

  • Have permission by the person or company named on the lease
  • They are on that person’s insurance
  • Or, they have their own fully comprehensive insurance that enables them to drive a lease car that is not in their name.
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If you want to add the person to your insurance, then let your insurance company know.

They will then add them on either a temporary or permanent basis.

Can I lease a car without being insured on it?

If you are financing a car for someone else, do you have to be insured on it?

Yes you do, but you don’t have to be the main driver. For example;

If you are financing a lease car for your spouse and they will be driving it 100% of the time, you will still have to be insured on it. But, you can have them as the main driver.  We’ve only really touched upon insuring someone else to drive your lease car, but you can read more about insuring someone else on your lease car here. 

Is insurance included in a lease contract?

Generally, no it isn’t. Around 99% of the time, you won’t get a lease contract that includes insurance. We cover who pays insurance on a lease car in more detail here.

Vehicle brokers themselves do not have the training or the accreditations to handle your insurance or advise you on it. Unless they are FCA regulated, then they are able to do so. But, brokers don’t tend to handle insurance.

Some of them do, however, have relationships with insurance brokers. This may save you the hassle of having to do it all yourself. But, you are not obliged to go through that insurance house. You might not be getting the best deal for your situation. However, a benefit of this is that you know that the insurance company is reputable and trustworthy.

There will be some manufacturers that offer free insurance for the first year, but that won’t be built into the agreement. It will still be separate. But, dealerships and manufacturers do offer insurance. However, you will be paying a premium for it.

Don’t forget that as insurance isn’t included in the price of your lease, this will bump up your payments. Sometimes, this can bring you over your monthly budget. So, that really cheap Audi might not be so cheap once you take insurance into consideration. Therefore, we recommend looking at the insurance before you agree to anything.

What should I look for when choosing an insurance company?

What sort of things should you be looking for when deciding which insurance company to use?

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    Check to see if they are reputable

  • Make sure their terms and conditions aren’t so strict you can never claim
  • Check you’re getting the right type of coverage
  • There are a lot of cheap insurance companies out there, but they don’t always offer you the right type of insurance.

Where can I find the cheapest insurance?

No company can guarantee they are providing you with the cheapest insurance. This is because each insurance company evaluate and price risks differently. It’s not a one size fits all process, insurance companies are bespoke. Experience and customer stories have taught us that going for the cheapest is not always the best. So, compare the different insurance companies with your broker.

The only thing we can recommend is having a look around to see what sort of deal you can get.
So, as you can see, leasing does affect insurance. However, it only affects what type of insurance you get. There are a whole load of other things that affect the price. While fully comprehensive may be more expensive, it is a condition of leasing a car. And while it’s not included in the lease contract, you can get your insurance through a broker if you wish.

Read our Top Tips on getting the best deal  on a new car here

Martin Mitton

Finance Team Leader at OSV Ltd
Martin enjoys: Meals with friends and family, swimming, films, sports and playing his guitar.

Martin loves to challenge the team to make sure every aspect of the leasing process is clear and fully compliant, but that doesn't mean he doesn't love to joke around as well. He's always smiling, even on the busiest days in the office.
Martin Mitton

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