Whether a car lease includes insurance, what cover a leased car needs, how GAP and no-claims bonus work, and how bundled cover compares with your own policy. General information only. We do not arrange leases or insurance.
By Adrian, Car Lease Deals UK · Updated 18 October 2026
Typical patterns only. Products differ, so check the policy documents of the one you are considering.
| Standard lease, your own cover | Insurance-included lease | Car subscription | |
|---|---|---|---|
| Who is the policyholder | You | Usually the provider, with you as a covered driver | Usually the provider, with you as a covered driver |
| Insurance requirement | You must buy fully comprehensive cover, and the funder may need to be noted on it | Included, so nothing to buy | Included, so nothing to buy |
| Named drivers | You choose and price them with your insurer | Often limited or added for a fee, check | Often limited or added for a fee, check |
| Excess | You choose the level and can often pay to reduce it | Set by the provider, often fixed | Set by the provider, often fixed |
| Young drivers | Can be very expensive alone, and some funders set a minimum age | Sometimes the only way to get an acceptable price, but age limits still apply | Same, check the minimum age and any young driver surcharge |
| No-claims bonus | You earn it | Usually not earned personally | Usually not earned personally |
| Gap cover | Check whether the funder includes or requires it; buying separately is an option | Check what the agreement says about a write-off | Usually handled by the provider, check what you owe if the car is written off |
| Price shown | Lease rental only, insurance separate | One monthly figure | One monthly figure |
| What drives the cost | Your age, history, postcode, car insurance group, mileage, cover level | The provider's pricing of your age, car and term | The provider's pricing, often less sensitive to your history |
| Switching insurer | Possible at renewal | Not possible, it is part of the product | Not possible, it is part of the product |
On a standard personal or business contract hire lease, no. The monthly rental pays for the car, and often servicing and road tax if you chose a maintained package, but motor insurance is yours to arrange. The car still has to be insured, whatever the rental.
Where insurance is included, it is a feature of a particular product: usually a subscription, a flexible lease or an all-inclusive offer. Names vary, so ask directly, and get the policy documents in writing before you rely on it.
The funder owns the car, so it sets conditions. Fully comprehensive cover is normally required, not third party only, and you need to have it in place before you collect the car. Many funders ask for proof, and some require them to be noted as the owner or to receive any payout for a total loss.
You are the registered keeper and responsible for the car, so you will usually also be responsible for the excess on any claim. Because the car is often new and valuable, repair costs and its insurance group can make premiums high, particularly for young drivers or those with a recent claim. Ask the funder for any limits on the excess or on using non-approved repairers.
Insurance and deposit are separate questions. Some all-inclusive products ask for little or no initial payment, in which case the monthly figure is usually higher to make up for it. A provider is still taking a risk on you, so an affordability check applies, and fewer applicants are accepted on the lowest-upfront terms.
Compare on total cost: initial payment plus every monthly payment across the term, plus any fees. A lower upfront cost with a higher rental can cost more over 12 months, or less, depending on the numbers.
All-inclusive usually means insurance, road tax, servicing and maintenance, and breakdown cover in one payment. There is no regulated meaning, so one provider's all-inclusive can exclude tyres, glass or a replacement car while another includes them.
Never included in any version: fuel or charging, parking, tolls and charging zone fees, fines, and damage beyond fair wear and tear at the end. A home wallbox for an electric car is normally a separate cost. The car's insurance group still affects the price of a bundled premium, so a higher-group car pushes the monthly figure up even when insurance is included.
There is no industry standard definition of comprehensive plus. It is a marketing label, and it generally means a comprehensive policy with extra benefits added, such as a courtesy car, windscreen cover, legal expenses, personal belongings cover or cover abroad. Which extras you get depends entirely on the insurer.
If a lease or insurer uses the term, read the policy summary, the schedule and the booklet, and compare the specific extras and limits, not the name. A basic comprehensive policy with a separately bought breakdown cover can match a comprehensive plus policy, and vice versa.
If a leased car is written off or stolen and not recovered, your insurer normally pays its market value at the time. On a lease, the early termination figure you owe the funder can be higher than that, because depreciation does not follow the lease schedule. GAP (guaranteed asset protection) cover pays some or all of the difference, depending on the type.
Some contract hire agreements include a form of protection, some funders sell it as an add-on, and some leave it to you. Check what the agreement says you owe after a total loss, whether the cover is already included, and whether buying separately costs less. This is the single most overlooked cost on a leased car.
A no-claims bonus is earned on policies in your own name. On a bundled policy the provider is the policyholder, so you usually do not earn a bonus, and a claim you make may not show on your own history either. The result is that the years you spend on a bundled policy may not count for a discount when you later arrange your own insurance.
Ask the provider whether they will give you a letter confirming claim-free years, and ask your own insurer whether it would accept it. If you already hold a no-claims discount, check whether it can be kept alive, as some insurers let a bonus lapse for a limited time while you drive a car insured by somebody else. Rules differ by insurer.
On 1 to 12 month terms, bundled insurance matters more, because a standalone policy for a few months is often harder to find and dearer per month than annual cover. The provider arranges cover for the length of the term and bills it with the rental.
Check the excess, whether it is fully comprehensive, whether other drivers can be added and what happens to the price if you extend.
These factors apply whether you buy cover yourself or a provider bundles it.
| Factor | Why it matters |
|---|---|
| Your age and driving history | Young and newly qualified drivers pay the most, and a recent claim or conviction adds to it. |
| Car insurance group | Groups rate cars by repair cost, parts prices, performance and security. Higher groups cost more to insure. |
| Postcode and where the car is kept | Theft and claim rates differ by area, and overnight parking location affects the quote. |
| Annual mileage | More miles means more exposure to risk. |
| Excess | A higher excess normally lowers the premium. Some cover for excess reduction is available. |
| Named drivers | Adding a driver, especially a young one, can raise or lower the price. |
| Insurance Premium Tax | Charged on motor premiums at the standard rate of 12%, and already included in a quoted price. |
This uses invented figures to show the method. It is not a quote and not any provider's price. Real premiums vary far more than this.
| Step | Working | Result |
|---|---|---|
| Driver A: own cover, monthly | £320 + £110 | £430 |
| Driver A: own cover, 12 months | 12 × £430 | £5,160 |
| Bundled, 12 months | 12 × £470 | £5,640 |
| Driver A: bundled costs | £5,640 − £5,160 | £480 more |
| Driver B: own cover, monthly | £320 + £210 | £530 |
| Driver B: own cover, 12 months | 12 × £530 | £6,360 |
| Driver B: bundled saves | £6,360 − £5,640 | £720 |
On these assumptions the bundled lease is £480 dearer for the experienced driver and £720 cheaper for the young driver. Driver A also keeps building a personal no-claims discount on their own policy, which the bundled option does not offer. The real lesson is to get one independent insurance quote for the exact car and compare the 12 month totals, not the monthly figures.
Concrete if/then guidance. None of it is a recommendation of a provider.
A standard lease does not. You arrange your own fully comprehensive policy. Some subscriptions, flexible leases and all-inclusive products do include insurance in the monthly payment, so check the specific product and ask for the policy documents.
It means the motor insurance is arranged by the provider and paid for within one monthly figure, instead of being a separate policy you buy. The provider is usually the policyholder, and you are a covered driver. Excess, named drivers and cover level vary by provider.
Fully comprehensive cover is normally required by the funder, not just third party. You usually need it in place before you collect the car, and some funders ask for proof or to be noted on the policy. Check your agreement for the exact conditions.
Some all-inclusive products ask for little or no initial payment, usually with a higher monthly rental. An affordability check still applies, and acceptance can be stricter. Compare the total over the term, including fees, rather than the upfront cost alone.
There is no standard meaning. It usually covers insurance, road tax, servicing and breakdown cover, but tyres, glass or a replacement car may be excluded. Fuel or charging, parking, tolls, fines and end-of-lease damage are never included.
It is not a defined industry term. It generally means comprehensive cover with extra benefits such as a courtesy car, windscreen cover, legal expenses or personal belongings cover. What is included depends on the insurer, so compare the listed extras and limits.
It is worth checking. If a leased car is written off, the insurer pays its market value, but the early termination figure you owe the funder can be higher. GAP cover pays some or all of the shortfall. Some agreements include protection, so read yours before buying separately.
Usually you do not earn a personal bonus, because the provider holds the policy. Claim-free years may not count when you later arrange your own cover. Ask the provider for a letter confirming your claim-free time and check whether your insurer accepts it.
It depends on the driver. For young drivers or those new to the UK it can work out cheaper, because standalone premiums are high. A driver with several years of no-claims discount may do better arranging their own, and gets to keep building the discount.
You do, usually. The excess is set by the provider's policy and is often fixed, so check the amounts for accident, theft and glass claims, and whether young or additional drivers carry a higher excess.
Some products accept drivers from 18 or 21, others set a higher minimum age. Bundled insurance can help because individual premiums are often very high for under-25s, but the product may still add a young driver surcharge. Check the age limits first.
The full leasing basics
3, 6 and 12 month terms
How subscriptions compare
The short guide
Lease or finance, explained
Official economy and EV range tables
Add insurance and fuel to a lease rental to see the all-in monthly cost.