If you’re considering leasing a car, you may be wondering, does car leasing include insurance? Car insurance is a legal requirement to drive, and understanding how it works in a leasing context can save you a lot of hassle & potentially money. Whether you’re new to leasing or exploring your options, this guide will take you through everything you need to know about car insurance when leasing a vehicle.

How Does Car Leasing Work?

It’s important to understand the basics of how car leasing works. Leasing a car is essentially a long-term rental. Instead of buying a vehicle outright, you pay a monthly fee to use it for an agreed period—typically 2 to 4 years. At the end of the lease, you return the car. In some cases, you may have the option to purchase it outright.

A lease agreement usually includes:

• An initial upfront payment (often referred to as a deposit or initial rental).

• Fixed monthly payments for the duration of the lease.

• A mileage allowance, beyond which you may incur additional charges.

• Responsibility for maintaining the car in good condition, allowing for fair wear and tear.

However, car insurance is not automatically included in most car leasing agreements. This means you’ll need to arrange your own insurance policy unless the lease deal explicitly states otherwise.

If you’re not sure about leasing, you can read about what other types of car finance are available here.

Does Car Leasing Include Insurance?

In most cases, car leasing does not include insurance as part of the standard agreement. You’ll typically need to source your own insurance policy to comply with UK law. Remember, most leasing policies will require you to have comprehensive insurance.

That said, some leasing companies offer car leasing with insurance as part of their package. These deals are often marketed as “all-in-one” or “fully comprehensive” lease agreements. While convenient, they tend to be more expensive than arranging your own insurance. You should always check what your agreement includes.

What’s Included in Insurance Packages from Leasing Companies?

When insurance is included in your lease deal, the cover may provide:

1. Fully comprehensive insurance – This covers damage to the leased car, other vehicles, and third parties.

2. Guaranteed Asset Protection (GAP) – If the car is written off, GAP insurance covers the difference between the insurer's payout and the remaining lease balance.

3. 24/7 breakdown cover – Some packages include breakdown assistance for added peace of mind.

While these packages can simplify the leasing process, you’ll need to carefully weigh the costs against sourcing your own insurance. If you have insurance as part of your leasing agreement, make sure you know what’s covered.

Arranging Your Own Car Insurance for a Lease Vehicle

If your leasing deal doesn’t include insurance, you’ll need to arrange your own policy. Here’s what you need to know:

1. Type of Cover Required

Leased vehicles typically require a fully comprehensive insurance policy. This is because you don’t own the car, and the leasing company needs assurance that the vehicle is protected against damage or theft.

2. Named Driver and Legal Owner

When arranging insurance, you’ll list yourself as the named driver and the leasing company as the legal owner or registered keeper of the vehicle. Be sure to provide this information accurately to avoid any issues with your policy.

3. GAP Insurance

GAP insurance is highly recommended for leased vehicles. Standard car insurance covers the market value of the car at the time of a claim, which can be significantly lower than the amount owed on your lease. GAP insurance bridges this gap, ensuring you’re not left out of pocket.

4. Compare Quotes with Caura

When arranging insurance for your leased vehicle, using a platform like Caura can simplify the process. With Caura, you can:

• Compare quotes from over 160+ insurers, helping you find the best deal for your needs.

• Benefit from £500 free excess protection when you purchase through the app, giving you extra peace of mind.

• Store all your insurance documents securely within the app, so everything you need is always in one place.

This approach not only saves time but also ensures you’re fully covered while keeping costs manageable. You can download Caura here.

Benefits of Car Leasing with Insurance Included

If you prefer simplicity and are willing to pay a premium for convenience, car leasing with insurance included might be worth considering. Some benefits include:

1. Hassle-free process – All your costs are bundled into one monthly payment, saving you the effort of arranging separate insurance.

2. Predictable expenses – With insurance costs fixed for the duration of your lease, there are no surprises.

3. Peace of mind – Lease packages often include GAP insurance and breakdown cover, ensuring comprehensive protection.

However, keep in mind that these deals may not always offer the best value. Compare the total cost of an all-in-one lease package to the combined cost of arranging insurance and GAP cover independently.

Factors That Affect Car Insurance Costs for Lease Vehicles

When leasing a vehicle, the cost of your insurance will depend on several factors:

• Car value – High-end or luxury vehicles typically cost more to insure.

• Your driving experience – Young drivers or those with limited experience often face higher premiums.

• Annual mileage – Exceeding your lease’s mileage allowance can increase premiums.

• Location – Drivers in urban areas may face higher insurance costs due to increased risk.

By understanding these variables, you can make adjustments (e.g., increasing your voluntary excess) to lower your premium.

Conclusion

So, does car leasing include insurance? Not by default. While some leasing companies offer insurance-inclusive deals, most agreements require you to arrange your own policy. The right choice depends on your priorities:

• If you value convenience, a lease package with insurance might be the way to go.

• If cost savings are your priority, arranging your own insurance and GAP cover could offer better value.

With tools like Caura, comparing insurance quotes is straightforward and hassle-free. You’ll not only have access to competitive deals but also benefit from £500 free excess protection and the convenience of managing everything in one app. You can get a quote here.

Whichever you choose, make sure you understand the terms of your lease agreement and insurance policy.

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