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Novated lease

Novated lease car insurance: bundled policy or your own?

Last checked: 22 October 2026 · 6 min read · By The EV Insider

Short answer: on a novated lease the car must be comprehensively insured at all times. You can usually either take the insurance your lease provider bundles in (often a fleet policy paid through your lease budget) or bring your own retail policy and be reimbursed from your pre-tax lease account. The biggest difference is often what happens if the car is written off: a standard retail policy may pay out less than you still owe on the lease, leaving a gap you'd have to pay yourself.

General information only, not insurance or financial advice. We don't recommend any insurer or lease provider, and we don't earn anything from insurance.

General information, not tax advice. Rules change and your circumstances differ. Check the ATO sources linked here and speak to a registered tax agent or your employer's payroll team before you decide.

Option 1: the insurance bundled with your lease

Many lease providers offer a fleet or group policy designed for novated leases. The premium comes out of your lease budget, so it's paid from pre-tax salary along with your other running costs.

As one published example (not a recommendation), Leaselab says its novated policy includes gap cover, cover for anyone legally able to drive, a new vehicle after total loss within 3 years of first registration, choice of repairer and hire car cover. It also notes that inclusions change, so you should read the PDS (Leaselab, checked 22 October 2026).

Things to check with any bundled policy: - Is the premium shown as a separate line in your quote, so you can compare it? - Does it include gap or write-off cover, and what are the limits? - What's the excess, and are there extra excesses for young or unlisted drivers? - Does it cover EV items such as the charging cable and battery fire? (See comparing EV insurance quotes fairly.) - What happens to the policy if you leave your job or end the lease early?

Option 2: bring your own policy

Most providers let you use your own insurer. The usual process, as Easi describes it (Easi, checked 22 October 2026):

  1. Get quotes and buy the policy yourself, paying the insurer directly (monthly or annually).
  2. Tell your provider the premium so it can be budgeted into the lease.
  3. Send a Certificate of Currency showing the rego or VIN and the policy owner's details.
  4. Claim the premium back from your lease account once enough pre-tax funds have built up. Easi says it can't reimburse in advance from funds that aren't there yet.

Easi suggests at least 24 months of new-for-old cover and says you're responsible for making sure the cover is adequate. Leaselab warns that most retail policies don't cover the gap between the insurance payout and the amount owing on the lease (Leaselab).

The write-off gap, explained

During a novated lease the finance company owns the car. If the car is written off, the insurer pays out its market value or the agreed value, depending on your policy. The lease still has to be paid out, so if the payout is lower, you cover the difference.

Scenario Amount
Insurance payout after a write-off A$19,000
Amount needed to pay out the lease A$21,000
Gap you'd owe without gap cover A$2,000

Worked example from Oly's Total Loss Assist page (checked 22 October 2026). Illustrative only.

EVs make this more relevant. The Insurance Council of Australia says a battery can cost A$7,500 to A$30,000 to replace, up to 40% of an EV's value. It also says even scratched battery packs have led to write-offs where there was no diagnostic data to prove the cells were undamaged (ICA, Charging Ahead, May 2024). More on this in why EV insurance costs more.

What gap cover looks like (published examples)

These examples show how different the products are. They aren't recommendations:

Who owns the policy, and the "interested party"

Your lease provider or financier will usually want its interest noted on your policy. For example, TFM Novated says the car "must be comprehensively insured for the full insurable value at all times", with TFM "noted as an interested party (as financier) on the policy" (TFM Novated lease FAQ, checked 22 October 2026).

What that means in practice: - You're normally the policyholder. The financier is noted as an interested party. A novated fleet policy defines the "Financier" as the organisation noted on the certificate of insurance, which "may also be expressed as the 'Interested Party'" (Paywise novated comprehensive PDS, October 2023). - Noting isn't automatic. One fleet PDS says the insurer won't insure anyone else's interest "unless you have notified us in writing of such interest and we have agreed to note that interest" (Vero Motor Fleet Group Policy PDS, via SG Fleet). - Tell your insurer about the lease when you buy the policy, and give them the financier's name. Then check that it appears on your certificate before you send it to your provider.

Which suits you?

If you... Worth considering
Want the simplest set-up and gap cover included The bundled policy (check its excess, drivers and EV inclusions)
Already have a good no-claim history or a multi-policy discount Your own policy, plus separate gap cover if needed
Drive an EV close to its value at the start of the lease Asking specifically about write-off and gap cover, whichever option you choose
Have young or occasional drivers Checking named-driver rules and extra excesses on both

Get both quotes for the same cover: same valuation basis, same excess, same drivers. Our guide to comparing EV insurance quotes has a checklist.

Bottom line

Bundled or your own, the questions are the same. Is there gap cover? Is the financier noted? Are the EV items covered? Insurance is one of the biggest running costs inside a lease, so compare it like for like. It also links to the end of the lease: if you keep the car after paying the balloon, the policy becomes yours to manage (see what happens at the end of a novated lease).

FAQ

Do I have to use my lease provider's insurance?

Usually not. Most providers let you bring your own comprehensive policy and reimburse the premium from your lease account. Check your agreement.

Is the insurance premium paid from pre-tax salary?

When it's included in your lease budget, yes. With your own policy you pay the insurer and claim the premium back from the pre-tax funds in your lease account.

What is gap cover on a novated lease?

Cover for the shortfall when a written-off car's insurance payout is less than what's needed to pay out the lease. Limits and conditions vary a lot, so read the PDS.

Does the finance company need to be on my policy?

Lease providers commonly require the financier to be noted as an interested party. Ask your provider for the exact wording, and ask your insurer to note it.

Disclaimer: this is general information only, not insurance, financial or tax advice. It doesn't take your circumstances into account. Read the Product Disclosure Statement (PDS) and Target Market Determination before buying any insurance, and check your lease agreement. We don't receive any payment from insurers. See our About page for details.

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Sources

Last checked: 22 October 2026. General information only, not tax, financial, legal or credit advice. We don’t recommend any provider; where businesses are named, it’s for information. See our affiliate disclosure.