Does car finance include insurance?

Alisa Dan

4 November 2025

Car finance does not usually include insurance. The finance agreement covers the cost of the vehicle and any interest, but insurance remains a separate product. Most lenders, however, require proof of insurance before releasing the car. This protects both the borrower and the lender if the vehicle is damaged or written off.

Comprehensive cover is the most common requirement because it insures against damage to both your own car and others. Third party insurance meets only the legal minimum, but it rarely satisfies lender conditions. Gap insurance may be offered separately to cover the difference between the car’s insured value and the outstanding finance if the vehicle is stolen or written off.

Why does car finance not include insurance?

Car finance does not usually include insurance. Finance agreements only cover the cost of the vehicle and interest payments — not protection against damage, theft, or accidents.

Most lenders, however, make insurance a condition of the loan. They typically require proof of comprehensive cover before releasing the car, as confirmed. This ensures the lender’s asset remains protected if the vehicle is written off or stolen.

When insurance might be included

Sometimes, insurance can be part of a car finance deal. It’s not common, but there are a few situations where it might be included:

• Some finance deals bundle insurance with the monthly payment, especially when buying a new car.
• Occasionally a dealership or broker offers a “packaged payment” that covers vehicle cost + insurance + servicing.
• These bundled offers tend to be less common and may carry higher overall monthly payments because you’re effectively paying for the extra insurance cover.
• If you request a package explicitly, your broker may help you find a lender or deal where insurance is included.