However, one of the questions that people often ask is whether PCP car finance includes insurance. Throughout this article, we will thoroughly examine this question and furnish you with a definitive response.
What is PCP Car Finance?
Before we delve into the question of insurance, it’s important to understand what PCP car finance is. PCP car finance is a type of car finance that allows you to buy a car over a fixed period, typically 2-4 years. During this period, you pay a fixed monthly amount that covers the depreciation of the car. At the end of the contract, you have the option to either pay the balloon payment and keep the car or return the car to the finance company and walk away.
Does PCP Car Finance Include Insurance?
The short answer is no, PCP car finance does not include insurance. When you take out PCP car finance, you are responsible for arranging your own insurance policy. This means that you need to shop around for the best deal on car insurance and ensure that you have the right level of coverage to protect yourself and your car.
Why Is Insurance Not Included In PCP Car Finance?
There are several reasons why insurance is not included in PCP car finance. Firstly, car insurance is a legal requirement in the UK, and it’s the responsibility of the car owner to ensure that they have the right level of coverage.
Secondly, car insurance is a highly competitive market, and there are many providers offering different types of policies at varying prices. Including insurance in PCP car finance would limit consumer choice and could result in customers paying more for their insurance than they need to.
What Type Of Insurance Do You Need With PCP Car Finance?
When you take out PCP car finance, you will need to arrange two types of insurance: comprehensive car insurance and gap insurance.
Comprehensive car insurance: Comprehensive car insurance covers you for damage to your car and any third-party damage or injury that you may cause. This type of insurance is a legal requirement in the UK, and it’s important that you have the right level of coverage to protect yourself and your car.
Gap insurance: Gap insurance is designed to cover the difference between the amount you owe on your PCP car finance agreement and the amount your car is worth if it’s written off or stolen. This type of insurance is important because if your car is written off or stolen, your car insurance policy will only pay out the current market value of the car. This could be less than the amount you owe on your PCP car finance agreement, leaving you with a shortfall to pay.
Where Can You Get Insurance For PCP Car Finance?
When it comes to arranging insurance for PCP car finance, you have several options. You can choose to go directly to an insurance provider, use a comparison website, or use a broker. It’s important to shop around and compare prices to ensure that you get the best deal on your insurance. You should also make sure that you read the terms and conditions of your policy carefully to ensure that you have the right level of coverage.
Conclusion
In conclusion, PCP car finance does not include insurance. When you take out PCP car finance, you are responsible for arranging your own insurance policy. This means that you need to shop around for the best deal on car insurance and ensure that you have the right level of coverage to protect yourself and your car. When arranging insurance for PCP car finance, it’s important to consider both comprehensive car insurance and gap insurance to ensure that you are fully protected in the event of an accident or theft.
