Under a novated lease it is a mandatory finance condition that the leased vehicle is comprehensively insured for the duration of the lease period.
In selecting a comprehensive insurer it is important to understand the underlying lease structure and how charging of interest occurs.
With most financiers, the bulk of the interest component is paid down in the first part of the lease term. That is, with the initial payment the majority of the payment is meeting the interest cost. it can take up to half of the lease term before inroads into the principal amount occurs.
On this basis, Salary Packaging Queensland recommends the best new for old comprehensive insurance policy is taken. Care is needed that any maximum kilometre condition imposed by an insurer is not exceeded, as this may remove the "new for old policy offer" and replace it with a market value policy.
Appropriate "new for old" insurance cover may cost more than "low cost insurers". The benefit of a "new for old" policy is that in the event of a successful claim, there is no financial disadvantage to the insured party.