When you drive off the dealership floor with a leased or financed car, one of the first things you’ll need to think about—before enjoying that new-car smell—is insurance. Unlike owning a car outright, leasing and financing agreements usually come with stricter insurance requirements. Let’s break down what you need to know.

Why Insurance Is Mandatory

Leasing companies and banks want to protect their financial investment. Since you don’t technically own the car until it’s paid off, they need reassurance that if it’s damaged or written off, their asset is covered. That’s why comprehensive insurance is often a non-negotiable requirement.

Types of Coverage You’ll Need

1. Comprehensive and Third-Party, Fire & Theft

Most lenders and leasing companies will require comprehensive coverage, which protects against damage to your own vehicle and third-party claims. This goes beyond the basic third-party only option, which wouldn’t be enough to protect their investment.

2. Gap Cover (Optional but Recommended)

If your financed or leased car is written off or stolen, your insurance payout might not cover the full outstanding balance. Gap cover bridges this shortfall, preventing you from paying out of pocket for a car you no longer drive.

3. Excess Waivers and Add-Ons

While not always required, lenders may encourage you to consider excess protection or add-ons like roadside assistance. These can help with unexpected expenses and keep you moving without major delays.

4. What Happens Without the Right Cover?

Failing to maintain the required cover can put you in breach of your finance or lease agreement. That could lead to financial penalties, repossession of the vehicle, or being left personally liable for damages after an accident. Even worse, without proper cover, your car insurance claims could be rejected.

How to Save While Staying Compliant

Driving a leased or financed car doesn’t mean you need to overspend on insurance. Compare quotes from multiple insurers and look for flexible coverage options. Brands like Pineapple Insurance are known for innovative, digital-first solutions that make it easier to manage and customise your policy while staying compliant with your finance terms.

Final Thoughts

Yes, you do need insurance for a financed car—and not just the bare minimum. Lenders want comprehensive protection, and it’s in your best interest too. With the right insurer and optional add-ons like gap cover, you’ll not only meet your obligations but also drive with complete peace of mind.