Is Insuring a Lease Car More Expensive?
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When you're budgeting for a new vehicle, it's easy to focus on monthly payments and overlook other essential costs, like insurance. If you’re considering leasing, you might be wondering: Is it more expensive to insure a lease car compared to one you’ve bought outright or on finance?
Let’s break it down.
Does It Cost More to Insure a Leased Car?
In short, yes, it can cost more to insure a lease car. But it’s not because insurers automatically charge more for leased vehicles. Instead, it is typically down to the insurance requirements set by the leasing company.
Leasing providers technically own the vehicle, so they want to protect their asset. This means you’re likely to need more comprehensive cover than you might with a car you’ve purchased or financed, which can drive up your premium.
So, while the base cost of insurance doesn’t change just because you’re leasing, the extra requirements often do. This doesn’t mean that leasing a car is more expensive than purchasing outright, it is just one element of the leasing process. Leasing has many benefits, of which you can read about here.
What Insurance Do You Need for a Leased Car?
Most lease agreements will require you to have what’s commonly known as full cover. In the
UK, this generally includes:
Comprehensive Cover
This protects against damage not just from accidents, but from theft, fire, weather, vandalism, and other unexpected events.
Collision Cover
Although sometimes included within comprehensive policies in the UK, this ensures repairs are covered if you're involved in an accident, even if it’s your fault.
Third-Party Liability
Legally required, this covers injuries to other people and damage to their property. Lease companies often require higher limits than the legal minimum.
GAP Insurance
This one’s often overlooked. Guaranteed Asset Protection (GAP) insurance covers the difference between your car’s current market value and what you still owe if the car is written off or stolen. Some lease providers insist on it.
Factors That Affect the Cost of Lease Car Insurance
Several elements influence how much you’ll pay for car insurance, whether you’re leasing or not. Here are some of the big ones:
Your Location: Areas with higher crime or accident rates often attract higher premiums.
Vehicle Type: More expensive or powerful cars cost more to repair or replace.
Safety Features: Cars with advanced safety tech may qualify for discounts.
Your Driving History: A clean record helps keep premiums low.
Mileage: The more you drive, the higher the risk, especially if your lease includes generous mileage.
Your Age & Occupation: Younger and older drivers typically pay more.
Credit Rating: While used differently in the UK than other countries, your financial profile can still impact what you pay with some providers.
How to Save Money on Lease Car Insurance
Just because lease car insurance might be higher, it doesn’t mean you can’t cut costs. Here are a few tips:
1. Shop Around
Don’t accept the first quote you get. Comparison sites are a great place to start, but speaking to a broker can sometimes uncover better deals, especially for leased vehicles.
2. Increase Your Voluntary Excess
As long as you can afford to pay it in the event of a claim, a higher excess can reduce your premium.
3. Bundle Policies
Insuring more than one car, or combining your car and home insurance, can earn you multi-policy discounts.
4. Improve Vehicle Security
Fitting a Thatcham-approved alarm or tracking device could knock some pounds off your premium.
5. Consider a Lower Insurance Group Car
If you’re yet to choose your lease vehicle, keep insurance groups in mind. Cars in lower groups usually cost less to insure.
6. Maintain a Good Driving Record
Avoiding claims and penalty points over time helps build a no-claims discount, significantly lowering your cost.
Is Lease Car Insurance More Expensive?
Generally, yes, insuring a lease car can be more expensive because providers need protection for the vehicle. They often require higher levels of cover and lower deductibles (excesses), and may insist on policies like GAP insurance.
However, this doesn't mean leasing isn’t affordable overall. Many customers still find leasing a more cost-effective way to drive a newer vehicle, especially when you factor in lower repair bills and predictable monthly payments.
Before signing a lease, it’s always worth getting an insurance quote based on the specific car you're considering. Or, consider leasing a car with insurance included. That way, there are no surprises, and you can make a well-informed decision that fits your budget.
If you can any questions regarding insurance, feel free to check out our FAQ page or get in touch with our expert team, who are always happy to help!