What Happens If You Total A Leased Car?

After being involved in a car accident with the leased car, so many thoughts could be running through your mind, with one of the most common questions being,  what happens if I total my leased car in a car accident?

 Lease cars are very common in California, and allow drivers a great opportunity to drive a new car without having to worry about purchasing it, or paying a purchase price. If you have been involved in a car accident with the leased car, look no further.

Our attorneys will help you with your car accident claim or lawsuit whether you were driving a leased, purchased, or financed car at the time of the accident. There are various steps you should take depending on the type of vehicle involved in the accident.

What is a leased car?

A leased car is similar to renting a car, but for a longer term. This means that a customer did not purchase the vehicle outright, but instead is paying a lower monthly amount for a specific time frame to drive the vehicle. Usually, vehicle leases range from around 2 years to 4 years. After the vehicle lease time frame is over, the customer then has the option of buying out the car, returning the car, and leasing another vehicle. Leased vehicles offer a great benefits to drivers, including:

• Vehicle warranty: leased vehicles oftentimes offer vehicle warranty as long as you are driving the vehicle. This means that the warranty may expire once the vehicle is returned back to the dealership.
•  Driving new vehicles: leased vehicles are oftentimes new vehicles, and offer customers a great way to test out the latest car models without having to purchase it.
•  Low monthly payments: leased vehicles are usually a lower monthly payment cost than purchasing the vehicle since you are only paying the leased amount and not the purchase amount.

Although there are several great benefits to driving a leased vehicle, there also may be some complications when it comes to totaling the vehicle in an accident. The way to go about a car accident with a purchased vehicle versus a leased vehicle are two completely different ways.

Sometimes, having a leased vehicle involved in a car accident could be a bit of a headache. This is where our attorneys come in. If you or someone you know has been involved in a car accident in California while driving a leased vehicle and has suffered property damage, give us a call today to discuss. 

Do I need car insurance to drive a leased vehicle in California?

You need car insurance to drive any vehicle in California. When it comes to leased vehicles, you could still move forward with your car insurance, but the requirement is that you have the minimums required under California law. Some leasing contracts include coverage such as collision coverage, and comprehensive coverage. This is to cover the vehicle in cases of an accident, or disasters.

What is gap insurance?

Gap insurance refers to insurance that covers a car that has been totaled or stolen, and the remaining balance of the lease. This type of insurance kicks in when a leased vehicle has been involved in an accident, or has been stolen. Some lease agreements have a gap insurance already included in their contracts.  

In other cases, many car insurance companies offer gap insurance to cover that time frame and cover a portion of the amount left for your lease.

In order to determine how much your gap insurance will cover, you must provide documentation that shows that the car has been totaled or will require repairs, and the amount of time left on the lease. For more information on how to file a gap insurance claim, give us a call.

What is a totaled vehicle?

The term totaled is used to refer to a vehicle whose repairs are more costly than the actual value of the vehicle itself. This occurs when the vehicle sustains heavy property damage and is essentially unrepairable. The repairs could be made, but there is no value to making those repairs. In some cases, the vehicle may not be totaled. For example, if the value of the vehicle is much higher than the cost of repairs, then you may only have to pay the damage for the repairs, and may be able to return the vehicle back to the dealership after the repairs. But keep in mind that the dealership is still made aware of the accident, and could charge fees on returning the vehicle with a much lower value.

What happens if I total a leased vehicle in a car accident in california?

 Below are steps that are taken for a leased vehicle that has been totaled in an accident:

• Insurance companies will assess the accident, by reviewing photos, accident reports, and interviewing witnesses. They will determine whether the vehicle is totaled, or merely needs repairs. This is determined by investigating the car’s actual cash value. This is the value needed for the vehicle to return to its normal state.
•  Once the insurance company determines that the vehicle is totaled, they will then issue a settlement check to the leasing company. The customer does not get the settlement check, and instead is paid out to the actual owner of the car.
•  Although the customer cannot return the vehicle to the dealership, they may still have to pay a variety of termination fees. For example, they may have to pay an early termination fee for having to get out of their contract before the lease is over since the vehicle is no longer drivable. In some cases, some dealerships may also refrain from doing business with the customer once again with another vehicle because of the driver’s history of the accident and totaled vehicle. 
•  In some cases, gap insurance will kick in. Gap insurance covers the difference between the settlement amount that the insurance company has paid to the dealership and the amount that should be paid out to the dealership. Sometimes, insurance companies do not pay the exact amount left on the lease, but may pay a lower amount. In that case, the customer may then have to pay the difference if they do not have gap insurance.

Who’s insurance do I contact?

It depends on the responsible party. For example, if the other driver was negligent and caused the accident, then you may be able to file a claim with the other driver’s insurance company. But, sometimes, you may have to file a claim with your own insurance company if the other driver’s insurance company does not adequately cover the rest of the lease payment.

We know how frustrating it could be if you have been involved in an accident with the leased vehicle, especially if the accident was not your fault. We recommend that you contact our attorneys so we can get started on your case right away. An investigation is very crucial for car accidents, especially to make sure that you were not responsible for causing the accident, and you do not end up paying unnecessary fees for something that is not your fault.

Have you been involved in an accident with a leased car? Contact us today for a free case evaluation.

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