Rather than owning a car, many drivers prefer to lease one. Cheaper car payments and a brand new, more expensive vehicle every few years sounds appealing enough, right? What’s more, there are typically lower maintenance expenses because the car is under manufacturer warranty throughout the lease. These are only a few benefits of leasing a car compared to owning one. But what happens if you crash a leased car?
An automobile crash involving a leased car is comparable to all other types of vehicle accidents in many ways. To begin with, no matter what sort of vehicle is involved, traffic accidents are always stressful. There is generally no way around that fact. Further, everything you should do after a leased car accident remains the same as it would be after any vehicle accident. You should still share all relevant information with the other motorist, and you have the right to seek compensation for monetary damages. However, things can get tricky when insurance companies become involved, especially when it comes to an accidents involving a leased car.
In this post, our Shreveport personal injury attorneys at Gordon & Gordon will explain in detail what happens if you crash a leased car.
What’s a Leased Vehicle?
Having a leased vehicle is similar to renting a car. You’re paying to use it for a certain amount of time, and you have no ownership interest in it. The leasing company gets the car back once your lease period ends.
Getting a loan and buying a vehicle is different from a vehicle lease. You make monthly payments on a purchased vehicle until the loan’s paid and you own it. A lease works similarly, except you don’t own the car after fulfilling the lease contract.
What Options Are Available When My Lease Ends?
When your time is up, the car returns to the dealership where you leased it. You’ll have three options. You can walk away from the lease. If you do this, you owe any applicable mileage and wear and tear charges, as well as a turn-in fee.
Your next option is trading the vehicle in for another. You don’t have to take it back to the same dealership. You can do business anyplace you’d like and get virtually any car you want. Furthermore, you aren’t charged for wear and tear, mileage, or a turn-in fee if you do a trade-in.
Finally, you can buy the car. Lessees have the first option to buy it for the vehicle’s residual value. If you choose not to buy the car, then the dealership has a chance to purchase it. If the dealership doesn’t want it, it goes back to the lease company for auction. You don’t owe charges or fees if you buy your leased vehicle in Louisiana.
What Do I Need to Do If I Lease a Vehicle?
Like with any other vehicle, you should make sure you have enough insurance coverage to protect yourself if any car accidents occur. However, if your wreck happens in a leased auto, there are some additional factors you may want to consider before leasing a vehicle:
- The minimum amount of insurance coverage for all Louisiana drivers
- Comprehensive and collision coverage to cover you if you cause a collision
- Uninsured/Underinsured motorist coverage to protect you if the other driver has no insurance or not enough insurance
- You need to make sure your insurance coverage meets the requirements of your lease agreement
- Gap coverage to pay the vehicle off if the car is totaled
Gap Coverage
Gap coverage is insurance that kicks in if your leased vehicle’s value is less than the amount you still owe for it. This applies when a claims adjuster decides a car is totaled. This insurance makes up the “gap” between the car’s value and the financial obligations you still owe in your lease agreement. Some leasing companies require gap insurance, and it’s helpful for drivers who can’t make a large payment on their leased vehicle after a wreck.
What Happens if You Wreck a Leased Car?
When you’re in an accident in a leased vehicle, you should pull over to the side of the road and stay put. If anybody is injured, contact emergency medical services immediately. You must also follow all regulations regarding police reporting of the accident. As such, call your local police station and request an officer to come to file an official report.
Of course, you must also notify the leasing company and your insurance provider of the accident. From here, you must decide the car’s damages. You may fix it and keep the lease, or you may cancel the lease, depending on the extent of the damage. Your auto insurance policy and gap insurance—if you have it—should cover the losses. If you can fix the car, your insurance pays for any necessary repairs minus your deductible.
Read Also: Common Causes of Collisions in Shreveport
What Happens if You Total a Leased Car?
If you total a leased car, you still owe the leasing company the value of the vehicle. When the vehicle is a total loss, your insurance coverage should reimburse you for its current worth. You’ll end the lease when the current value of the vehicle equals the remaining balance of the lease, and you break even.
Unfortunately, you will most likely still owe the leasing company money. On the other hand, gap insurance pays the difference. You could also be able to roll the amount into a new lease. Check to see whether you have gap coverage included on your policy if you have an outstanding lease payment following an accident.
Steps to Take After an Accident in a Leased Vehicle
If you are in a collision in your leased vehicle, call 911 for help. When law enforcement arrives, they’ll take down your statement about what happened before, during, and after the crash.
If you can, check on other people involved in the wreck and get medical attention for them if needed. Speak to accident witnesses and gather contact information from them. If possible, take pictures of the auto accident scene and save any evidence. You should also get the contact and insurance details for the other driver.
As soon as possible, contact your insurance company. Be sure to provide information about the accident, such as the location, time, and date. If you call the other driver’s insurance carrier, also give them your name and contact details. Don’t discuss fault, particularly if you’re thinking about getting a lawyer. Should you retain a lawyer before speaking with the insurance companies (which is often the best decision you could make), your legal counsel can handle that for you.
There’s an additional step when your accident involves a leased vehicle. You must also let the leasing company know about the wreck. Make sure you’re familiar with your leasing contract and understand what the contract states about accidents. If you have a Shreveport car accident lawyer, they’ll look over your lease agreement and contact the leasing company for you.
Read Also: How to Report a Car Accident
Who is Responsible for Damages in a Leased Car Accident?
What happens when you wreck a leased car depends on the extent of the damage, who is responsible for the accident, and your insurance coverage. If another motorist is to blame for the accident, that driver’s insurance company should be liable for the losses. Their insurer would be responsible for paying your insurance claim for your leased car’s repairs or, if totaled, the vehicle’s market value. In this case, the payment would be sent straight to the leasing company. All additional losses should be reimbursed directly to you, just like any other automobile accident claim when the other motorist was at fault.
However, if the other insurance company denies liability on behalf of the driver, you may need to contact your insurer to negotiate repairs covered by your policy. Leasing companies require you to have comprehensive and collision coverage, just like a lender would if you bought the vehicle with a loan. If your insurance company covers the repairs, it will file a claim against the other driver’s insurance company if the other motorist was genuinely at fault.
If your leased automobile is wrecked and you weren’t at fault, you also have the right to sue for your losses and obtain reimbursement from the guilty party who caused the accident. Whether you lease or own your car, you have the same right to file a compensation claim, which may be the only way to pay for the damages to your leased car.
In rare circumstances, one can recover damages from a leasing company if it did not share problems with the car with the lessee or if the leasing company somehow contributed to the wreck. This holds true even if you share part of the blame for the accident.
Read Also: What to Do After a Car Accident Injury
How Do I Prove the Other Driver Is At Fault For My Leased Car Wreck?
After any car accident, you must show the following to prove fault:
- Duty of care: The at-fault party was responsible for acting reasonably to avoid an accident that would cause property damage or injuries to another person.
- A breach of duty of care: The at-fault driver breached their duty of care by failing to avoid an accident. (Negligent behaviors that may lead to an accident include speeding, failure to yield, distracted driving, and impaired driving.
- The breach caused the accident: Your leased vehicle was damaged, and your injuries happened in the accident caused by the breach.
At Gordon & Gordon, our personal injury lawyers in Shreveport help establish fault, file your claim, and get the damages you deserve to cover your lost wages, medical bills, and more.
Read Also: Duty of Care and Personal Injury
If I Get Compensation for Damage to the Car, Do I Have to Give That Compensation to the Leasing Company?
This depends on your unique case. Often, leasing companies make you pay for damage to leased vehicles. You get to keep the funds if you paid out-of-pocket for the repairs. However, If your insurance company pays for the damage, they’ll likely request that amount from your settlement as repayment.
Read Also: Should I Settle My Insurance Claim?
Double Charges for Accident Repairs
Vehicles must undergo an inspection once lease agreements ends. If the automobile was involved in an accident and you had the car repaired on your own and without letting them know, the leasing company can penalize you for the crash. If the leasing company thinks the repairs are subpar and wants them done again, you could be charged for these additional repairs, as well.
Be sure to read over your contract before letting the leasing company know about an accident. If the leasing company prefers a particular repair shop, use it unless they don’t accept your car insurance. If that happens, let the leasing company know. They can direct you to another body shop.
If that is the case, inform the leasing company and choose another repair shop. Because the leasing company selects the repair shop, you might avoid double charges if the company is not satisfied with the repairs.
Read Also: Are Personal Injury Settlements Taxable in Louisiana?
How Does an Accident Affect a Car Lease?
Your lease terms are left unchanged if you are involved in an accident. You must still pay the leasing company for the vehicle’s actual value. However, your insurance provider will likely pay for repairs. If you also have gap insurance, it pays the difference between the car’s full value and what you owe in remaining payments.
Turning in a Leased Car with Damage
Some people falsely believe that when it comes to their leased car, the leasing company waives any damage so long as they go into a new lease. However, this is not the case. Regardless of what the dealership tells you, someone will be responsible for the damages, and it won’t be them. Even if you lease another automobile from that dealership, the damage will not be forgiven.
Though you may not have to pay for your damages out of pocket if you lease another car from the same dealership, the tradeoff will be considerably worse. The leasing company will roll damages from your previous vehicle into your new lease. As such, you will be essentially paying for them for the duration of the new lease, as well as paying interest.
The strategy is straightforward: increase the vehicle’s price to compensate for the damage. So instead of getting $2,000 off the invoice, you won’t get an invoice for the car. They may also utilize some incentives on the new car lease to pay off the damages on the previous vehicle rather than passing them on to you.
Read Also: What To Do After a Car Accident That is Not Your Fault
No matter the avenue you followed to get your car – leasing, paying cash, or using a car loan – car insurance is required. Although each state has its own set of minimum standards, most states require drivers to have bodily injury and property damage liability insurance. Many states also mandate personal injury protection in addition to uninsured motorist coverage.
When it comes to leased cars, you are typically required to have higher levels of insurance than the legal minimum. As the vehicle’s legal owner, the leasing company will want to safeguard its investment in case of an accident. As a result, you’ll likely need to acquire additional insurance.
This often includes collision insurance, which protects the car in a collision with another vehicle or an object such as a telephone pole or other structure. Comprehensive insurance will also likely be required. This covers losses not caused by an accident, such as those caused by theft or fire. Purchasing a more comprehensive coverage will result in a higher vehicle insurance premium.
Read Also: Is it Illegal to Not Have Car Insurance?
Wondering What To Do After You’ve Crashed a Leased Car? Call Gordon & Gordon Right Away!
If you’ve been involved in a car accident of any kind, including one in a leased vehicle, be sure to contact the Gordon & Gordon Law Firm right away. Our Louisiana car accident attorneys have been helping people in the Shreveport, Bossier, and Mansfield areas for decades, and we can help you too.
Our law firm handles various cases, from car or commercial truck accidents, to dog bites, pedestrian accidents, oilfield accidents, and so much more. Give us a call at 318-716-HELP or send us a message about your case to request a consultation at any of our convenient locations in Northwest Louisiana. If it’s compassionate legal counsel and peace of mind you’re looking for, get Gordon & Gordon today!