Insuring a Lease Car

Insuring a lease vehicle

Motor insurance is a legal requirement for any car owner and driver on UK roads. If you drive without insurance then you face a fine of up to £1,000 and the risk of having your car seized and destroyed.

It can cover you in the event that the vehicle is stolen, vandalised, catches fire or is involved in an accident. Depending on the type of insurance you opt for, it can also cover any injuries sustained if involved in an accident, legal costs and damage to any third-party property or persons.

When you lease a vehicle it'll still be your responsibility to insure the vehicle though there are some differences between arranging insurance for a lease vehicle and arranging insurance for one you own outright. The insurance won't be included by the funder as part of the lease agreement.

Types of insurance

As mentioned above, there are different levels of insurance you can get for your car. There are 3 main levels:

• Comprehensive
• Third-party, fire and theft
• Third-party

Within the 3 levels there are a number of different kind of policies that you might consider, for example, multi-car policies allow households to claim a discount for insuring multiple vehicles, young driver insurance is designed specifically for young drivers to help with the usual high costs associated with their higher risk and you can even get short-term insurance.

How to insure a lease car

As mentioned above, there are some differences between insuring a vehicle you purchase and insuring one you're leasing.

The first thing you need to be aware of is that a lease vehicle isn't usually registered until the day of, or day before, delivery. This means that most insurance providers won't be able to locate the vehicle by searching the registration on the DVLA’s database as they can take a couple of days after registration to appear.

They'll be able to provide you with an insurance quote and insure the vehicle based on other information on the vehicle specification which we can provide you with if you're leasing through Xcite Car Leasing.

If you're leasing a vehicle that is pre-registered then this shouldn't be an issue for you as the vehicle will be showing on the DVLA’s database.

Another thing to be mindful of is that most funders will require you to have comprehensive cover, and it'll usually be stated in the contract you sign. This means you must have fully comprehensive cover or you'll be breaking the terms of your lease agreement. 

What are the benefits of insuring a leased car?

As mentioned, it’s a legal requirement for any driver on UK roads to insure their car, but in addition to following the law there are also benefits to insuring your leased car, including:

• Complying with your lease contract.
• Financial protection against risks and potential losses.
• Comprehensive coverage can provide protection against non-collision incidents like theft, fire, vandalism and other damage.
• Collision coverage gives you the peace of mind that if your car is damaged in a collision then the repair costs will be taken care of.
• Professional assistance throughout any claims processes, guiding you on the steps to arrange repairs and communicate with all other parties involved in any incidents.

Will I need to provide you or the funder with proof of insurance?

You won't usually need to provide us with proof that the vehicle is insured. The most common exception for this will be if your vehicle is on a fleet insurance policy as some of our funders will ask for proof of insurance if they can't find it on the DVLA’s system and need the vehicle to be insured before they can set it live on their system.  

There may be circumstances when your lease provider will ask for proof of your vehicle insurance during the lease, for example if you plan on going abroad with the car, but you won't need to provide it for most of the lease.

Private registrations and lease car insurance

You can add your personalised number plate to a lease vehicle however for most funders this can't be done until after the vehicle's been delivered and on their system. This is to avoid complications and delays with delivery to you.

Because you'll change the registration number you'll need to insure the vehicle on the registration it's originally delivered on and then once your funder confirms the new registration's been updated you'll need to amend this with your insurance provider.

Tips for getting the best deal on your insurance

There are a few steps you can take to help you get the best deal on your car insurance, such as:

• Shop around a few car insurance sites to compare quotes to see who's the cheapest.
• Consider a multi-car policy if you've other cars that need to be insured too, as you may be able to get a discount.
• See if you can bundle your insurance in with other products, such as life insurance or home insurance.
• Make sure you drive safely, as the safest drivers with clean driving records get better insurance rates.
• Ask as many questions as you can to the insurance company, to make sure you’re getting the best deal with the right people for you.
• Read all of the fine print of the insurance contract.

Insuring a lease car FAQs

Do I need to insure a lease car?

Yes, you'll need to insure your new leased car. You’ll be required to have comprehensive insurance in place before we’re able to organise the delivery of the car to you.

How much does it cost to insure a lease car?

The cost of insuring your new lease car will depend on the type of car that you've leased, as well as some personal information, such as your age, driving history, where you live and the type of insurance that you’ve chosen. We can’t give an exact figure on how much you can expect to pay, as it'll depend on a combination of all the factors listed above. 

What other factors can affect the price of leased car insurance?

As well as the aforementioned factors like your age, driving history, where you live and the type of insurance you've chosen, the following can also affect how much you pay for insurance:

• Your credit score: A good credit score can help you get a lower insurance rate.
• Your employment status: Drivers who are employed full-time tend to pay less for insurance than unemployed drivers.
• Your annual mileage: If you drive a lot of miles, you can expect to pay more for insurance.
• The make and model of your car: Some cars are more expensive to insure than others.

What happens if I don’t have insurance on my lease car?

It's a legal requirement for drivers in the UK to insure their car, and not doing so means you could also be criminally charged for driving without insurance. The leasing company could sue you for any damage to the car if you don’t have the correct insurance as per the agreement you sign.

Can I transfer my existing car insurance to a leased car?

The ability to transfer your existing insurance policy to a leased car varies depending on your insurance provider. Certain insurers permit policy transfer, allowing you to maintain your current coverage. However, other providers may necessitate modifications to your policy or the acquisition of a new one specifically tailored for the leased vehicle. To be certain of your situation, it's advisable to contact your insurance company and discuss your options.

What should I do if I have an accident in a leased car?

In the event of an accident, it's important to follow the established protocols for reporting the incident to both the authorities and your insurance company. Furthermore, it's crucial to inform your leasing company about the accident as they may have specific guidelines and prerequisites concerning the repair process. By adhering to these steps, you can ensure that all necessary parties are informed and that the appropriate procedures are followed.

For more information, you can read our guide on what to do after an accident.