Insurance is one of the biggest reasons people pick the Motability Scheme. It's included in your lease from the start, with no separate policy to arrange, no quotes to compare and no renewal admin at the end of the year.
This guide covers what Motability Scheme car insurance includes, what it doesn't, who can drive, how to claim and what changes from July 2026. For the wider picture of how the Scheme works, read our step-by-step guide to the Motability Scheme with Vertu.
What is Motability Scheme car insurance?
Lease a car, Wheelchair Accessible Vehicle (WAV), scooter or powered wheelchair through the Scheme and comprehensive insurance comes as part of the package. Direct Line Motability (DLM) has been the Scheme's insurance provider since 1st September 2023, replacing RSA Motability.
Cover sits alongside servicing, repairs, tax and breakdown cover for the length of the lease. It's why so many customers describe it as worry-free motoring.
What's covered?
Your Scheme policy includes:
Fully comprehensive cover
Insurance for up to three named drivers
Accident and damage cover
Fire and theft protection
Windscreen and glass cover, handled by Autoglass
Public liability cover for scooters and powered wheelchairs
RAC Motability Assist breakdown cover
What isn't covered?
Like any motor policy, Scheme insurance has limits. The main exclusions are:
The insurance excess, which applies before a claim is settled
Personal belongings left in the vehicle
Damage caused by driving outside the terms of your Certificate of Motor Insurance
Adaptations fitted without the Scheme or DLM being told
Interior wear-and-tear, such as ripped seats or stained upholstery
For the full detail, check your Insurance Cover booklet or sign in to your Motability Scheme online account.
Who can drive your Motability Scheme car?
Only drivers listed on your Certificate of Motor Insurance can legally drive the car. You can have up to three named drivers on a standard policy, each approved by DLM before they're added.
Different rules apply to drivers under 25. They're limited to petrol, diesel or hybrid cars in ABI insurance group 16 or under, with a maximum power output of 120bhp.
Households that rely on multiple carers can request an open insurance policy on a WAV, covering approved carers rather than named individuals. For the full rules on adding, removing or updating drivers, read our guide to adding named drivers in the Motability Scheme.
Adapted vehicles and WAVs
Scheme cover is designed to work with the adaptations many customers rely on. Changes declared through Motability stay covered under the policy, as long as DLM has been informed and the adaptation is on record.
Adaptations fitted without being declared can leave you uncovered if something goes wrong, so it's worth checking before any work takes place.
For WAV customers, the open insurance policy makes shared use practical. Paid or unpaid carers can be approved to drive without being individually listed. It's especially useful for families and households with changing care arrangements.
Making a claim
If you're involved in an accident or your car is damaged, you contact DLM directly rather than a separate insurer.
Report the incident through your Motability Scheme online account or by calling the DLM helpline
DLM confirms whether an excess applies and arranges repairs, recovery and onward travel
Glass claims are handled separately by Autoglass, with the same excess rules
Because the car is leased rather than owned, you don't build a no-claims bonus during your lease. You can, however, request a claims history letter from DLM showing any claims made during your time on the Scheme. This can help if you later move to a private insurance policy.
For wear-and-tear issues rather than accident damage, see our Motability Scheme Servicing and MOT page.
What's changed from July 2026?
November 2025's Budget introduced tax reforms that affect parts of the Scheme. The changes came into force on 1st July 2026 and applies to new leases taken out from that date.
Insurance Premium Tax
From 1st July 2026, Insurance Premium Tax (IPT) applies to insurance on most new Scheme leases at the standard rate of 12%. Insurance stays part of the lease package, but the overall cost may rise for some customers.
VAT on Advance Payments
If you choose a car above your allowance, standard-rate VAT at 20% now applies to the Advance Payment top-up. This mainly affects higher-spec and higher-value cars. For more on how pricing is set, read our guide to how Motability Scheme pricing is decided.
WAVs and heavily adapted cars stay exempt
Vehicles substantially and permanently adapted for wheelchair users aren't affected by the new taxes. No IPT applies to the insurance, and no VAT is added to Advance Payments, keeping cover accessible for customers with the highest mobility needs.
Existing customers
If your current lease started before 1st July 2026, your terms carry on unchanged until the agreement ends. The new taxes only apply when you take out your next lease.
What stays the same
Most of what makes Scheme insurance appealing hasn't changed:
Comprehensive insurance included in every lease
Up to three named drivers covered as standard
Open insurance policies available for WAV customers
RAC Motability Assist breakdown cover included
Annual servicing, repairs and MOT taken care of
No separate insurance to shop around for, renew or arrange
What it means for you
Already on the Scheme? Nothing changes until your current lease ends, so your insurance and tax status stay the same for now.
Joining or renewing after July 2026? Some cars, mainly non-adapted higher-spec models, may cost more because of IPT and VAT.
Driving a WAV or heavily adapted car? Your costs should stay largely as they are, thanks to the continued exemptions.
Thinking about a premium car? Expect higher Advance Payments on models that exceed the standard allowance.
Motability Operations has confirmed it will keep offering a range of nil Advance Payment vehicles, so choice remains available across budgets.
Any questions?
For anything we haven't covered here, visit our Motability Scheme FAQs or get in touch with your nearest dealership. The Scheme team can walk you through eligibility, cover, adaptations and anything specific to the car you're considering.
- Motability