Who is responsible for insuring a vehicle on business lease?

Car insurance is mandatory in the UK. When you drive a leased company car for the first time, it may feel confusing trying to work out who is the registered keeper of the vehicle and, crucially, who is responsible for insuring it.

This is essential information for individual drivers of business leased company cars and businesses that provide one or more leased vehicles for use by employees.

Who Owns A Leased Vehicle?

This part is simple. When you lease a vehicle (either as a personal customer or as a business), you do not own it. A lease is essentially a long-term hire agreement. The leasing company is the legal owner of the vehicle.

Equally, the leasing provider remains the registered keeper of the vehicle. This should be fine when it comes to insuring the car. Business leasing is a well-established way to provide company cars, and insurance providers cater fully to that.

Who Insures A Leased Vehicle?

Although the vehicle is owned by the leasing provider, in a business leasing arrangement, it is typically the business that must ensure the vehicle is insured (and the insurance covers anyone who drives it).

This means that the insurance policy that covers the car must be the company’s motor vehicle insurance policy and in the company’s name.

It’s worth noting that this also means that the individual who drives the car will not necessarily need to have any motor vehicle insurance. The company’s car insurance covers them to drive the lease vehicle,, and they will only need private car insurance if they wish to drive another vehicle which they own or lease privately.

What Level Of Insurance Is Required?

It’s usually best to get fully comprehensive car insurance to protect against substantial losses on leased business cars. For example, if the vehicle is severely damaged or destroyed in a collision, arson attack, or other malicious damage.

UK law only requires third-party insurance as a minimum. However, if the vehicle is destroyed by fire, stolen, or damaged due to an error by the driver, the business might be held liable for the full cost to repair or replace the car.

Business car leases often involve the latest models on the market that are within their first few years off the production line. Comprehensive car insurance makes even more financial sense while the vehicle is still worth a high percentage of its initial retail value.

Can Anyone Else Drive The Car?

In many cases, a company car insurance policy entitles the company to allocate drivers to vehicles as and when appropriate. In principle, this means no specific driver is associated with a specific vehicle.

Because of this (assuming your company car insurance allows it), you may be able to provide the car to any qualified, insured driver who works for you and meets the conditions of your business insurance policy.

You may be given sole use of the vehicle as an employee, but this is an arrangement between yourself and your employer, rather than a prerequisite of your business car insurance coverage.

Can Non-Employees Drive The Car?

Some business leased cars are also permitted for personal use outside of work hours. If your company car is also your family’s main vehicle, you might sometimes want your spouse to take the wheel.

This is not necessarily a problem, but your spouse must be insured to drive the vehicle. You may need to provide your company with proof of your spouse’s driving licence to add them to the insurance policy.

If unsure, don’t let your spouse (or anyone else) drive the car. It should be easy to check with your employer, and it’s not worth the risk of driving uninsured.

Is There An Age Limit?

There’s usually no prohibitive age limit on who can drive a business leased car. You must hold a full driving licence, and the company’s car insurance policy must cover you, but age usually is not a factor.

Equally, there is no upper limit on the acceptable age of the driver. As long as you have a valid driving licence and are still fit to drive, there should be no reason why you cannot do so.

Of course, the terms and conditions of your business lease will always take precedence when it comes to specifics like age; if in doubt, check your contract or ask your leasing provider, who should be able to clarify without too much difficulty or delay. In most cases the minimum age is 18 years old and all drivers must have a full driving licence which the company has a responsibility to check.

Summing Up

We have covered frequently asked questions about business car insurance for leased vehicles and other related issues. Hopefully, this has given you an overview of the main factors to consider when getting insurance for a leased company car.

Remember:

• The leasing provider is the owner and registered keeper of the vehicle.
• The business is the named policyholder on the car insurance.
• Multiple people (and potentially their spouses) may drive the car with cover.

Your business car insurance policy will set out all the terms of your cover. If you have any remaining questions, you can contact your leasing provider or insurer, both of whom can help.

Ultimately, remember that it’s essential that any car should only ever be driven by an insured individual with a valid driving licence. It’s a legal requirement that protects your business against financial losses.

As a business that provides leased company cars to your employees, it’s your responsibility to ensure that you have adequate insurance in place. With that taken care of, you can have complete peace of mind that your employees, vehicles, and financial interests are properly protected.