If you’re planning on driving a new car using cheap car leasing or personal contract hire, it may be a condition of your deal that you take out comprehensive insurance. If there car doesn’t belong to you then your car lease company will want to know that the vehicle is adequately protected in the event of theft or an accident.
For years, many customers have seen this as a disadvantage of leasing a car. That’s because drivers generally assume that comprehensive insurance is more expensive than third party cover, and so pushes up the total monthly cost of a car lease. However, new research has found that, for many people, comprehensive cover is actually cheaper than third party and can save you money. Keep reading to find out more.
Young people pay less for fully comprehensive insurance than for third party cover
Fully comprehensive insurance covers damage to other cars as well as your own. Third party only covers other drivers if you are to blame in an accident and your policy will only pay out to cover the third party.
It follows, therefore, that comprehensive car insurance – often a condition of car leasing or contract hire – would be more expensive than third party cover. However, research from a leading financial website published in the Daily Telegraph has found that most people under the age of 40 will find it cheaper to take fully comprehensive insurance rather than third party cover.
The analysis shows that an 18 year old driving a Ford Fiesta choosing third party only cover was quoted 146 per cent – or about $2,000 a year – more for their insurance than if they had opted for a fully comprehensive policy.
The Telegraph reports that this trend continues until age 40; on average a 20 year old could save about $500 a year opting for fully comp and a 25 year old will find it about $75 cheaper on average.
Peter Harrison, car insurance expert at the website who commissioned the research, said: “Comprehensive cover is often the cheapest for most age groups, as well as offering the highest level of protection. Young drivers should pay particular attention to the policy terms and conditions and take into consideration how they would fund the cost of repairs should they be involved in an incident their policy doesn’t cover.
“You should also check the excess levels on your policy as some insurers may uplift this amount based on the age of the driver – a high excess could add hundreds to the cost of a claim.”
Comprehensive cover can be cheaper as it suggests that you are a more responsible driver. Because young drivers in particular ask for third party cover to cut their costs it makes insurers suspicious of the type of drivers asking for this cover and they raise their premiums accordingly.
A spokeswoman said: “Typically younger drivers will purchase a lower value car and in the past would have insured this under a third party policy as this used to be the cheapest option. Since insurers have become aware of this practice, they have made it so a fully comp policy is cheaper for a young driver as this not only protects the driver in the event of a claim, but also the insurer.”
Many car leases and contract hire plans will insist that you take out comprehensive insurance. As well as offering low cost finance for your car this condition could also now be saving you money on your insurance.
Author Bio: Vincent Hill is Marketing Executive at First Vehicle Leasing. First Vehicle Leasing provides
best chevrolet car leasing solutions to all over United Kingdom.