Motability insurance is an essential part of the worry-free motoring package that comes with leasing a vehicle through the Motability Scheme. Recently, several updates have been introduced, from changes in insurance providers to upcoming tax reforms that may affect the cost of leasing a vehicle in the future.
In this guide, we explain the latest Motability insurance updates, what's staying the same, and what these changes mean for you.
What is Motability insurance?
When you lease a car, WAV (Wheelchair Accessible Vehicle), scooter or powered wheelchair through the Motability Scheme, comprehensive insurance is included as part of your all-inclusive lease package. This means:
- Fully comprehensive cover
- Insurance for up to three named drivers
- Accident and damage cover
- Fire and theft protection
- Windscreen and glass cover
- Public liability cover for scooters and powered wheelchairs
This level of cover is designed to give Motability customers complete peace of mind, with no need to arrange separate insurance.
Recent Motability insurance updates
New insurance provider: Direct Line Motability (since 2023)
Since 1 September 2023, Direct Line Motability (DLM) has replaced RSA Motability as the Scheme's insurance provider.
Key points include:
- The transition was automatic for existing customers.
- Policy documents were sent out in 2023 via post or email.
- Coverage levels remained largely the same.
Customers can now manage claims, view their policy, and update named drivers digitally through their Motability online account.
This change was designed to offer improved customer service and a smoother, more modern digital experience.
Upcoming changes to Motability insurance and costs
In November 2025, the UK Government announced new tax reforms affecting some parts of the Motability Scheme. These come into effect during 2026 and may affect future leases.
Insurance Premium Tax (IPT) will apply from July 2026
From 1 July 2026, new Motability leases for most standard vehicles will include Insurance Premium Tax (IPT) at the standard rate (currently 12%).
This means that although insurance is still part of the package, the overall cost of the lease may increase for some customers.
VAT changes on advance/top-up payments
If a customer chooses a car that requires an Advance Payment or "top-up" (because it exceeds the allowance), then from July 2026:
- Standard-rate VAT (20%) will apply to the top-up amount
This may increase costs for those choosing higher-spec or higher-value vehicles.
WAVs and adapted vehicles remain protected
There's good news for many customers - vehicles that are substantially and permanently adapted for wheelchair users will not be affected by these tax changes.
This means:
- No Insurance Premium Tax
- No VAT added to advance payments
These protections remain in place to support customers with the highest mobility needs.
Existing customers remain unaffected until renewal
If your current lease began before 1 July 2026, you will continue under the old tax-free rules until your agreement ends.
This means you won't see any of the new tax changes until you start a new lease.
What stays the same with Motability insurance?
Despite the upcoming changes, many key benefits remain unchanged:
- Comprehensive insurance included in every lease
- Coverage for named drivers
- Breakdown cover included
- Annual servicing, maintenance, repairs and MOT all included
- No need to arrange insurance yourself
The Motability Scheme's commitment to worry-free motoring continues, even as some cost structures evolve.
How to make an insurance claim
If you're involved in an accident or your vehicle is damaged:
- Report the incident to Direct Line Motability through your Motability online account or via their helpline.
- They will arrange repairs, recovery, or onward travel as needed.
- Your insurance excess (if applicable) will be confirmed during the claim process.
The process remains simple, with support available 24/7.
What do these updates mean for you?
If you're already on the Scheme:
- Nothing changes until your current lease ends. Your insurance and tax status remain the same.
If you plan to join or renew after July 2026:
- Some vehicles (primarily non-adapted, higher-spec cars) may cost more due to IPT and VAT changes.
If you drive a WAV or heavily adapted car:
- Your costs should remain largely unaffected thanks to continued exemptions.
If you prefer premium vehicles:
- Expect higher Advance Payments due to VAT being added from 2026.
Motability Operations has also confirmed it will continue offering a range of affordable zero-Advance-Payment vehicles, ensuring choice remains available across budgets and needs.
So, what's changing?
- Direct Line Motability is now the insurance provider.
- From July 2026, IPT will apply to insurance on most new leases.
- VAT will apply to Advance Payments for higher-spec cars.
- Some customers may see higher overall costs when choosing premium vehicles.
What's staying the same?
- Insurance remains comprehensive and included in the lease.
- Named drivers are still supported.
- WAVs and significantly adapted vehicles remain exempt from new taxes.
- Existing leases stay on current terms until renewal.
It is hoped that these insurance updates will enhance your Motability experience. Stay up to date with our Newsroom for more Scheme news.
- Motability