UK law states that you if own, lease or rent a vehicle; you must have appropriate motor insurance in place to use the vehicle on UK roads and in public places. For lease vehicles, the vehicle must be insured on a fully comprehensive insurance policy.
Here at Nationwide Vehicle Contracts, we often get asked questions regarding insurance on a lease vehicle from our customers. To help you understand exactly what your obligations are with regards to insurance, we have put together a list of the most commonly questions regarding insuring a leased vehicle.
While a lease contract includes many benefits including free delivery, full manufacturer’s warranty, breakdown recovery and road tax, insurance is not included in your lease contract. You are responsible for arranging your own insurance on the vehicle. This must be a fully comprehensive insurance policy and the hirer obtaining finance must be the main policy holder on the insurance certificate.
Once your vehicle has arrived at the dealership and all necessary checks have been completed, we will contact you to arrange delivery and to confirm your vehicle registration. It is at this point that you can arrange your vehicle insurance in anticipation for delivery.
Your new lease vehicle needs to be insured from the day of the delivery and must remain insured until your vehicle is collected by the finance provider. Proof of insurance is required before delivery can take place. This must be a fully comprehensive insurance policy and the certificate must show your name, registration number and must be dated on or before your delivery date.
For personal lease agreements, the hirer obtaining finance must be the main policy holder on the insurance certificate.
For business lease agreements, the insurance certificate should be in the company name or a director's name. If an employee is required to drive the vehicle, a letter on company headed paper may be requested confirming that the employee is authorised to drive the vehicle and confirming his/her position in the company.
Guaranteed Asset Protection (GAP) insurance is an optional insurance policy which covers the difference between the value of the car (the amount your car insurer will usually pay out if the event of theft or total loss) and the amount you owe to the finance company for leasing the vehicle.
GAP insurance is an optional extra and is not legally required by the finance provider when taking out a lease contract but customers can choose to take out a GAP policy if they wish. To find out more about how GAP insurance works, read our handy GAP Insurance Explained guide.
If you are looking to keep costs down, we have put together some top tips that will help you to achieve a better price when shopping around for vehicle insurance:
Before you lease a vehicle, it is really important that you check the insurance group. An expensive, powerful car is more likely to be more expensive to insure than a cheaper city car, so it is advised that you check the insurance group first to ensure it is within your budget.
There are 50 insurance groups in the UK with 1 as the lowest and 50 as the highest. You can view the insurance group of any lease vehicle available through Nationwide Vehicle Contract by clicking on the Technical Specification tab on the vehicle webpage or by calling Nationwide Vehicle Contracts on 0345 811 9595.
It may be beneficial to add a second driver to the insurance policy to help reduce costs. When it comes to risk, having an experienced, additional driver on the policy may decrease your rate. It is important to note however that price will depend on the additional driver’s age and years of driving experience are really important. Don't forget, for a lease vehicle, the hirer obtaining finance must be the main policy holder on the insurance certificate.
Before you choose an insurance provider, it is worth checking online to compare insurance prices. Many comparison sites offer fast quotes for multiple insurance providers and can help you to find the best rate. However it is important to bear in mind that not all insurance companies are listed on comparison sites so additional research may needed. Here are a few examples to help you:
If you can afford it, it may be cheaper to pay your insurance for the entire year upfront and not by monthly direct debit. Sometimes it can be really tempting to spread the amount over 12 months but interest charges can increase the rate.
A telematics box, otherwise known as a 'black box', is a little device that the insurance company installs on the car to track your driving activity. It is considered a “pay as you go insurance” policy so the amount that you pay depends on your style of driving and your mileage. A black box policy rewards careful drivers so if you're the kind of driver who always sticks to the rules, a black box is certainly worth considering.
Please note, some finance providers do not allow a black box to be fitted to the vehicle so please ensure you check your lease contract before agreeing to this type of insurance agreement.
Subject to obtaining the funder’s permission, there should be no problem with adding a cherished plate to a contract hire/leased vehicle.
Please be advised that Nationwide Vehicle Contracts is unable to arrange for the cherished plate to be added to your vehicle before delivery as this can delay the delivery process, therefore we advise that you arrange this with the finance company direct after you have taken delivery of the vehicle.
It is also worth noting that the finance provider may charge an administration fee for this service and that the cherished plate must be removed from the vehicle before it is returned at the end of the contract.
Still have a question about insuring a lease vehicle? Contact one of our Customer Service representatives for more information and advice.