Health, home and life insurance may keep growing more complex, but insuring your PCP car remains refreshingly simple because all motorists in the UK are legally required to insure their car.
One thing to remember about PCP car insurance is that you don’t own the car. This is an important factor for the insurance company, but it’s not a big deal. When completing an insurance quote online, most providers will have a drop down menu asking about the ownership of a car.
Of course, there are other considerations when researching insurance for your PCP car. Keep reading to find out everything you need to know.
PCP insurance: who owns the vehicle?
If you take out a Personal Contract Purchase (PCP) agreement, the lending company (usually the car manufacturer), remains the owner of the car until the balance is paid in full. Decide to make the optional final payment when the contract ends and the car is yours, as you’ve effectively paid off the entire loan.
One of the most common questions asked when looking at insurance is who the legal owner of the car is when you take out a PCP deal. The answer is almost always the finance company, not you. You are the registered keeper of the car but not the legal owner.
In the UK there are separate concepts of ‘owner’ and ‘keeper’, and some insurance companies will not insure a car that is paid for through PCP, while others may put the premium up as a result.
But as PCP contracts account for such a large chunk of car sales, this is rapidly changing. So, if one company won’t insure you, there are dozens of others that will.
It’s important when you take out your insurance policy that you have clearly stated who the owner of the car is to avoid any issues if you need to make a claim. If you have an accident or damage the car and you’ve said you’re the owner when you’re not, this could invalidate your insurance, leaving you with no cover at all.
GAP insurance
Guaranteed Asset Protection (GAP) insurance works differently to normal insurance. Rather than covering the current value of the car in the event it’s written off or stolen – typically its current value – GAP may cover the difference between how much your insurer would pay out and the car’s list price or the remaining balance on the finance.
>> Comprehensive guide to GAP insurance.
Do PCP deals come with insurance?
PCP deals generally do not come with insurance. But there are offerings out there, such as Peugeot’s Just Add Fuel. These types of agreement include a car’s finance cost, car tax, servicing, roadside assistance, and insurance, in one monthly payment.
Cars that are leased are in a similar position. Volvo’s latest Care by Volvo scheme can include insurance bundled into the price. A few third-party companies also offer insurance deals.
>> How to find lease deals with insurance
PCP with free insurance
It’s sometimes possible to get free insurance thrown in with a car finance deal.
You’ll likely have to meet certain conditions – usually age and driving experience – but these can often save you hundreds, if not thousands on insurance. So it’s worth comparing the cost of these with alternatives that don’t include insurance, to see which is most cost-effective for you.
Small cars are most likely to be available with free insurance. Models like the SEAT Ibiza, Vauxhall Corsa and VW Polo periodically come with free insurance.
Shop around for the best deal
A lot of comparison sites don’t take into account if the car is legally owned by you and some do not even ask the question when you fill in the online forms.
This presents a problem should you then go on to the insurer’s site and have to fill in further forms. That means you could find that they either won’t cover you or the premium has increased because you are not the legal owner of the car.
The general advice if this happens is to phone in. It may be that the online system can’t cater for financed cars, but the company does provide it, so it’s worth making the call.
Further reading
>> How to voluntarily terminate your car finance early
>> Car leasing with insurance thrown-in
>> Best cars for £100 per month
>> Best cars for £150 per month
>> Best cars for £200 per month
>> Best cars for £300 per month
>> Best cars for £400 per month
>> Best cars for £500 per month
>> Deal Watch: top finance and leasing offers
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