Leased Car Insurance
If you are leasing a car in Australia, learn about your car insurance coverage options as well as the role of gap insurance with Savvy's helpful guide.
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Car leasing has become an increasingly popular option for businesses and individuals in Australia, offering the flexibility of driving a new vehicle without the commitment of ownership. However, when leasing a car, it is essential to understand your car insurance requirements. In this guide, we explore what car leasing is, the importance of comprehensive protection and other insurance options.
What is a car lease?
A car lease is a financing option that allows businesses and individuals to use a vehicle without owning it. The financier purchases the car and leases it to the lessee for a predetermined period, typically ranging from 1 to 5 years, with a residual payment at the end. There are two main types of car leases:
- Standard (non-maintained): requires the lessee to handle maintenance, car insurance and registration independently, offering more freedom but also more administrative work.
- Fully maintained: includes maintenance, insurance and registration in the monthly payments, providing convenience and easy budgeting.
What insurance options are available for leased cars in Australia?
If you have a fully maintained car lease, your car insurance will be included in your monthly payments.
If you are responsible for organising your own insurance, on top of your mandatory Compulsory Third Party (CTP) insurance, you will likely be required to take out comprehensive car insurance, which provides the most extensive protection of the different types of car insurance available in Australia. Comprehensive car insurance generally covers damage to:
- Your car resulting from an accident or collision
- Your car due to theft or the theft of your car
- Your car due to fire
- Another person’s car or property in an accident where you are at fault
It is also important to note that new cars lose value quickly, especially in the first few years. If your leased car is stolen or damaged beyond repair, the insurance payout may not cover what you still owe on the lease. To protect yourself, you may also have the option to buy gap insurance from the lessor, which helps cover the difference.
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Savvy’s comparison service includes selected products from a panel of trusted insurers and does not compare all products in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy. We always recommend readers to consult the Product Disclosure Statement (PDS) of different policies before purchasing your car insurance.