Accident in a Leased Car: What to Do Next
I am a serial entrepreneur and a consumer advocate. When I’m not helping car buyers, I love working on ventures that have a positive impact.
Leasing a vehicle offers a number of differences versus owning a vehicle outright. For instance, all of your vehicle’s repairs are covered during the life of the lease. Also, with a lease, you have some mileage restrictions.
But what happens if you get into an accident in a leased vehicle? After all, it is not your vehicle.
Here, we will answer all the questions you may have about handing a leased vehicle after an accident.
Table of Contents
Does an Accident Affect the Car Lease?
If you get into an accident while leasing a car, nothing has really changed with the lease contract. You are still bound to the lease contract terms, including the payments and any associated fees.
What To Do Next
When you get into an accident with a leased vehicle, you should begin by following the exact procedure that would take place with your own vehicle.
- First, you will call the police and get an accident report. Be sure to use your cell phone to take photos and videos of the accident for the insurance company. Be sure to get a copy of the accident report from law enforcement.
- Afterward, you should get any medical attention that you need.
- Once you have received your medical attention, then you should notify the leasing company about the accident.
If Car Is Totaled
If the vehicle is completely totaled, you will still owe the leasing company for the vehicle's value. Your vehicle insurance will usually cover the value of the vehicle. When the leasing company is made whole, then you can terminate the lease.
However, there are situations where the insurance company will make a payout, and you may still owe money on the vehicle. This is why it is important to have something known as GAP insurance for your vehicle.
If Car Can Be Repaired
After the accident, you will need to get the vehicle repaired using your vehicle insurance. You still have to make sure that the vehicle is returned to the leasing company in the same condition in which you leased it.
Who Pays for Repairs on a Leased Car?
The driver is responsible for the repairs on the leased vehicle. However, if the accident is not the driver's fault, then the other driver’s insurance company will be the one who pays for the repairs.
If you decide to lease a vehicle, it is highly recommended that you get GAP insurance. GAP insurance is designed to cover any outstanding money owed to the leasing company after your insurance company makes a payout.
Let’s say you are leasing a BMW 330i sedan with a value of $55,000, and you get into an accident that totals the vehicle. Your insurance decides to pay out $50,000 to the leasing company. However, the vehicle is worth $55,000. If you have GAP insurance, then the GAP insurance provider will pay the $5,000 difference between the vehicle's value and the payout from the insurance company. If you do not have GAP insurance, then you will be responsible for the $5,000 difference out of your own pocket.
Pursuing a Claim When Accident Is Not Your Fault
If you believe that the other party is responsible for the accident, you should pursue a claim like you would if you were the vehicle owner. When pursuing a claim, you will notify the other driver’s insurance company of the accident. When you are contacting the other driver’s insurance company, you will be asked about the details of the accident, including where you were hit by the vehicle. Also, you will be asked to provide information about the other driver.
After contacting the other driver’s claim, the other insurance company will either accept the claim or dispute it. If the insurance company accepts the claim, you will be instructed to estimate the repair and ultimately authorize you to have the vehicle repaired.
If the insurance company denies the claim, then you have a number of options available. One of the options is to take the other insurance company to court. However, this is a long and expensive procedure that could take months or even years. Also, pursuing the matter in court may not lead to the desired outcome.
Another option is to have the vehicle repaired under your collision policy. Usually, a leasing company will require you to have collision insurance as well as accident insurance. A leasing company wants to protect its investment and will usually make sure that you can repair the vehicle no matter what happens.
What Are My Options?
After you have been in an accident, you may be wondering what you should do about the lease. Here is a look at the options available to you.
- Continue the Lease as Normal - If you have completely repaired the vehicle, you can continue to lease the vehicle as normal.
- Return the Vehicle - After having the vehicle repaired, you can opt to return the vehicle and terminate the lease. If you choose this option, then you may have to pay an early termination fee.
- Purchase the Vehicle with Diminished Value - You also have the option to purchase the vehicle after it has been in an accident with diminished value.
- Replace the Vehicle - You can opt to have the vehicle replaced for the remaining term of your lease.
Be sure to carefully consider each of these options before making a final decision.
Frequently Asked Questions
Can I return a leased car after an accident?
You have the option to return a leased vehicle after an accident. However, you may be charged an early termination fee if the vehicle’s lease term is not up. Also, you can be penalized if the leasing company feels that the vehicle has not been repaired properly.
Do I have to report an accident on a leased car?
Yes. If you get into an accident with a leased vehicle, you will have to report the accident to law enforcement. You will also have to report the accident to your insurance company as well as the leasing company.
What if an accident in a leased car is not my fault?
If you get into an accident and the other driver is at fault, then you will have to make a claim with the other driver’s insurance company. If the other driver’s insurance company accepts the claim, then you must have the vehicle repaired. However, the other driver’s insurance company will pay for the repairs.
What happens if my leased car is totaled?
If your leased car is totaled, then you will be responsible for the value of the vehicle. Your insurance will value the vehicle and make the payment. However, some insurance companies do not pay the complete value of the vehicle. That’s why it is important to have GAP insurance. GAP insurance will cover the difference not covered by the insurance company.
What happens if you damage a leased car?
If you damaged a leased car, then you are responsible for having the vehicle repaired. However, if the vehicle is not repaired to the satisfaction of the leasing company, then you may be penalized at the end of your lease.