Every vehicle on the roads of the UAE is required to be insured by law, and leased cars are no exception. While there are plenty of options regarding cars in the UAE, several individuals or companies prefer to lease a car instead of purchasing one. However, as mentioned earlier, these cars too required a leased car’s insurance.
The key question which arises, then, is this - does the monthly payment for leasing a vehicle include insurance as a condition of the lease? When you lease an insured car, you'll pay a fixed monthly price in exchange for the use of a brand-new vehicle for a period that can be 2 to 4 years in several cases.
Answering the query raised previously, insurance is mostly not included in the transaction of leasing. This implies that it will be your obligation to insure the leased car before it is delivered. However, it should be remembered that several providers will provide ‘full care’ or ‘total care’ packages, which incorporate insurance as part of the monthly payment structure. In such cases, the only expenses you will have to worry about are petrol and, depending on the firm you choose, repairs for any unintentional damage that occurs.
However, if you obtain a car on lease that comes without an insurance plan, you will need to buy one for it as it is customary for the individual leasing a vehicle to be liable for the purchase of car lease insurance. Given below are all the major factors that will allow you to know what are the insurance requirements for a leased car and how to obtain one.
In the event that you lease a vehicle (instead of purchasing) and need to buy an insurance plan for the same, you will still be required to maintain the minimum auto insurance standards set by the state. While the amount of coverage required varies by state, you'll be required to have some sort of car lease insurance. The plans for leased cars in the UAE can be availed of in the form of collision and comprehensive insurance, gap insurance, and so forth.
Frequent Inclusions in Car Leasing Plans
While some providers place the responsibility of securing insurance for the leased car on the user, several firms offer packages that provide insured lease cars as well as asset protection and maintenance services in addition to the lease. The following items are frequently included in these types of deals:
Cover for a breakdown.
Maintenance of tyres, brakes, exhaust, wipers, and other routine procedures
Compensation for repairs in case of an accident, fire, or theft
If your provider is offering Total Loss Protection, your car will be covered in case it is totalled or stolen
If you do not choose an insured leasing agreement, you will be responsible for arranging an insurance policy by yourself. Here's all you need to know about leasing a car insurance policy.
Type of Insurance You Need for Insuring a Leased Car
Besides the UAE law of mandatory car insurance, it is also in the interest of the leasing company to have their vehicles protected financially against any damage. This can also prove beneficial for you as a borrower, as you will be spared the expenses if the car faces damages.
To have your car fully protected, you can always opt for fully comprehensive insurance coverage plans for insuring a leased car. While it may typically be the most expensive type of insurance coverage, it also provides the most extensive coverage in the exchange. Damage to other drivers and their vehicles, and yourself and your vehicle, are covered under fully comprehensive plans.
The benefits of such comprehensive plans are manifold. Besides financially protecting you and the accompanied passengers, these plans also safeguard you from being hit with unexpected charges for any damages. Consequently, if you need to make a claim, the only amount you will be required to pay is the specific fee that was stipulated when you purchased the policy.
What is Included in a Leased Car Insurance Comprehensive Policy?
In contrast to third-party insurance policies, comprehensive coverage of a leased car’s insurance generally provide the following benefits and covers:
Damage to other individual’s property
Medical bills for injuries
Windshield replacement
Temporary replacement vehicle (if your vehicle is under repair)
Besides the mentioned benefits and covers, insurance companies can also provide several other benefits, albeit in varying categories. Thus, it is advisable to thoroughly read the policy before considering it for the purchase.
Exclusions from Leased Car Insurance Comprehensive Policy
There are specific scenarios in which an insurer will reject your claim or declare your policy void. The following are the major situations where this could be the case:
If you were driving under the influence of alcohol or drugs and caused damages
Damages to car caused by normal wear and tear
Serious violation of the traffic laws
Insurance Requirements for Leased Cars
While car insurance is compulsory in the UAE (irrespective of the car type), the car lease insurance requirements may compel you to purchase additional coverage above your state's minimum coverage requirements. Purchasing full coverage auto insurance plans besides plain liability insurance usually result in a higher overall insurance cost but may prove beneficial in the longer run.
You can also avail yourself of the required add-ons along with your base leased car insurance plan. These add-ons provide cover against specific events that are not covered in the original plan. For instance, if you engage in off-roading in the UAE, you can add the off-roading cover to your plan at a nominal additional premium.
Factors Affecting Leased Cars Insurance Premiums
Several factors can influence your car leasing insurance prices, with the most notable one being the amount of deductible you choose to pay. A vehicle insurance deductible is the amount of money you are required to pay by yourself before your auto insurance policy will cover the costs associated with your claim. Higher deductibles result in lower premiums as the policyholder bears a greater portion of the expense.
Other considerations that can influence the insurance requirements for leased cars are:
If you've made the decision to lease a new vehicle, you'll need to be aware of the auto leasing insurance requirements as per the obtained vehicle. You can expect the following types of insurance plans for leased cars in the UAE.
Insurance Protection Against Liability
If you're financing a vehicle, entering into a car lease arrangement, or paying cash for a vehicle, you'll be required to obtain the liability auto insurance in most states. A liability insurance policy provides financial protection if you are at fault in an accident. Minimum coverage requirements vary as per your location, with the other fundamentals remaining the same.
When you get liability insurance, you gain access to the following benefits:
Liability for bodily injury: This coverage pays for other people's medical expenses if you are at fault in an accident.
Property damage liability: This insurance covers you against damage to other people's vehicles if you are at fault in an accident.
Collision and Comprehensive Coverage
While a liability insurance plan may fulfil the minimum legal obligations, all car providers will ideally prefer supplementary insurance coverage to ensure that their vehicles are adequately protected in accidents. Here, comprehensive insurance plans prove helpful, as they ensure adequate financial protection of the vehicle. These are the major forms of full coverage insurance plans in the UAE:
Collision car insurance: When you collide with another vehicle or object, collision coverage compensates for the damage to your automobile.
Comprehensive car insurance: This type of car insurance provides coverage for damages to your vehicle in situations like vandalism, theft, accidents, natural disasters, and so on.
Note: As a loss payee, you'll have to specify your lease provider when you apply for the required car leasing insurance protection. In the event of a total loss accident, the insurance company will make payments to the lessor.
Coverage for Gap Insurance
Although not always recommended when you get a car on lease, some providers may require you to purchase gap insurance in addition to your collision and comprehensive insurance policies. The term ‘gap’ can be considered as referring to guaranteed asset protection, where this car leasing insurance is activated in case a vehicle is totalled or stolen.
Generally, the actual value of the car at the time of the claim, lesser than what you purchased it for, is paid out by the insurer in this circumstance. However, if the deductible is more and the value of the automobile isn't enough to cover the remaining balance on the car lease, the gap insurance policy gets triggered and takes care of the rest of the payout.
It should be noted that there is always a possibility of you paying for gap coverage without realising it. As a general rule, if your lease payments include terms like ‘gap waiver’, it means that the dealership has already included gap insurance in your lease.
Best Way to Insure Your Leased Car
The process of insuring a leased car is similar to insuring your purchased car. The only major distinction between these two types is that while insuring a leased car, the leasing company is the registered keeper and owner of the vehicle instead of you.
With several insurance plans for leased cars available in the UAE, making a choice can often prove confusing. In such cases, you can follow the steps given below and make a start.
Request a quote: Owing to the abundance of websites of insurance providers in the UAE, obtaining an insurance quote for your leased car is as simple as getting a quote for a car that you own. Simply contact the insurance provider and inform them whether you are obtaining a personal lease or on the behalf of a business. With proper quotes provided by the insurance providers, you can have clarity regarding the major leased car insurance plans in the UAE.
Select the most appropriate dates: Ensure that you specify the commencement date of your leased car’s insurance coverage the same as the delivery date of your lease car to avoid any confusion later. It is in your best interest to ensure that your leased car’s insurance coverage continues until the day your vehicle is returned to the provider.
This aspect is crucial to note, as you will be charged even for the days on which you will not be driving the automobile if your selected starting date is too soon. Similarly, if your leased car’s insurance coverage doesn't begin until after your car is delivered, you won't be able to lawfully use it until then.
Shop and compare: After successfully obtaining quotes from various sites, you can start to compare the best leased car insurance plans in the UAE. This will provide you with an estimate regarding the key features and applicable premiums of several plans, which will help you make an informed choice later.
When comparing offers, keep an eye out for the presence or absence of the following characteristics:
Courtesy automobiles
Reparation of your windshield
Breakdown coverage
Telematics/black box insurance
Payment method and frequency: Most leased car insurance policy plans offer the option of making monthly payments or paying the entire amount in one lump sum. You can look for the option that suits your financial requirements without straining your finances.
How to Apply for Leased Car Insurance in the UAE?
To recap, applying for leased car insurance in the UAE is as simple as applying for a purchased car insurance plan in the UAE. If you are sure that your lease agreement doesn’t include insurance, you can always apply for a leased car insurance in the UAE in the following ways:
Offline: You can visit the nearest branch of your favoured insurance provider and request information on the plans available with them. Obtain an application form for your selected plan and carefully fill out the details. Provide the specified documents if asked by the provider, and submit the form. You will be contacted by the company for further steps
Online: Being the more convenient one, you can visit the website of an insurance provider and fill out the application form for the plan of your choice. If required, you can provide the prescribed documents by uploading them. After your application is submitted, the provider will connect with you for the remaining procedure.
With Us: If you want to complete all the steps related to leased car insurance purchase in one place, ranging from obtaining a quote and comparing to submitting your application, our website enables you to do that in a few clicks or taps of your device. Visit the ‘car insurance’ field on our website and secure your leased car insurance today.
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