Buying a new car is easily one of the most important decisions a person can make. Considering factors like safety features, performance, and affordability, most consumers prefer leasing rather than buying the vehicle outright.
It's important to remember that even though you are in possession of a leased car, you're not the registered owner. This also means that you must return the vehicle subject to BVRLA fair wear and tear guide after the lease expires. Car insurance is also equally crucial to any car owner, regardless of whether the car is owned or leased.
Some crucial questions may arise during the leasing procedure, such as "Is insurance required for leased cars?" or, more importantly, "How much is car insurance?" This article answers these questions to prepare you for any eventuality during the car leasing process.
Does Car Leasing Include Insurance?
Car insurance is mandatory in the UK, even for leased vehicles. In general, car leasing contracts do not include insurance, with some rare exceptions. So you will have to bear the cost of insurance on your own to avoid financial and legal trouble in the UK. Lease vehicles must have fully comprehensive cover at all times.
All funders require customers to purchase a fully comprehensive insurance policy for the leased vehicle. These policies cover damage to your vehicle in addition to others.
What Happens If My Leased Car Doesn't Have Insurance?
In the unfortunate event of an accident, those without comprehensive insurance will be liable to pay back the entire cost or value of the car to the lease company.
Types of Insurance for Leased Cars
A leased car must be insured from the day it's handed over to the customer until it is returned to the dealership.
A comprehensive insurance policy will protect you from any financial liability following an accident. This is highly recommended due to its ability to offer a broader umbrella of protections to leased car owners.
Guaranteed Asset Protection Insurance
Popularly known as GAP insurance, this isn't a legal requirement in the United Kingdom and is personal preference
Are There Any Specific Ways to Get Insurance for Leased Cars?
Getting insurance for your leased car doesn't differ too much from standard motor insurance. One major difference is that the leasing company will be the registered owner of the vehicle, as per the insurance records, and not you. This small technical difference doesn't affect the premiums you would pay on your car insurance.
Is Insurance More Expensive for Leased Cars?
While it may seem true on the surface, this is one of those myths that have been around for a long time. In reality, leased car insurance costs the same as regular car insurance. In some cases, experienced drivers with a clean driving record end up paying lower premiums for comprehensive insurance.
Insurance is determined by factors like the type of vehicle, address where the vehicle is kept, the individual's credit rating, the kind of policy chosen by the customer, and so on. This means that there are several factors that go into determining your premiums, even if your car isn't leased.
More expensive automobiles such as luxury SUVs and sports cars tend to have steeper premiums due to the high repair and maintenance costs.
Is There a Way to Lower Insurance Premiums?
Insurance premiums aren't cheap, depending on the coverage you choose. The same can be said for car insurance. However, there are some methods to reduce your leased car insurance premiums.
Opt to pay annually rather than monthly.
This is one of the easier ways to slash premiums and avoid excesses like high-interest rates, which are usually associated with monthly payments. Even if you are paying less at a time each month, the interest and other charges can end up becoming a burden in the long run.
Use a fair mileage estimate.
Insurance providers usually want to know how much your vehicle will be driven to determine a suitable policy. While it may seem logical to overestimate the distance you drive the car annually, doing so can also translate to higher premiums. So consider your daily routine, right down to the last mile, before you decide on a car insurance policy.
Add another driver to your policy.
A trusted and safe driver in your family can help bring down premiums. This is more so the case if the new driver is considered a lower risk than the primary driver. Insurance companies consider a number of factors when adding another driver to your policy, including driving history, age, license type, and more.
Some Final Thoughts
A car insurance policy is the same for leased and owned cars, but insurance is often not included in lease policies. You can get a leased car insured by any car insurance provider in the UK. Leased car dealers often strike partnerships with insurance providers. Customers could even obtain discounts if they're lucky.
Keep in mind that insurance premiums are determined based on age, driving history, past insurance records, and the individual's credit rating. While it's not impossible to get car insurance with bad credit, it can result in higher premiums.