Being involved in a car accident while driving a leased vehicle raises several important questions regarding insurance, repair responsibilities, and the terms of your lease agreement. It’s crucial to understand how a crash impacts your lease and what steps to take afterward to ensure you’re not faced with unexpected costs.
What Happens If You Crash a Leased Car?
If you crash a leased car, the process goes beyond just repairing the damage. Your lease agreement outlines your obligations, including maintaining comprehensive and collision insurance, which covers both the vehicle and your financial responsibilities. The leasing company will typically require repairs to restore the car to its original condition, and you may need to follow specific procedures as per your contract. If injuries occur during the crash, you’ll need to consider how both the repair costs and medical expenses are handled. Your insurance or personal injury claim may cover your medical bills if you are injured in the accident, which could influence how you manage the financial aspect of the damage to the car.
Do You Have to Report Damage to a Leased Car?
Yes, you are required to report any damage to a leased car. Lease agreements typically include a clause that mandates you notify the leasing company about any accidents or damage, even if it’s minor. Failing to do so can result in additional charges when it comes time to return the car at the end of the lease. If you’ve sustained injuries, it’s even more important to report the accident, as it could lead to legal claims beyond the damage to the car itself. Ensuring that both your injury and the car’s damage are documented will help protect you from unexpected charges or penalties when returning the vehicle.
Financial Implications of a Leased Car Accident
The consequences of an accident depend on the severity of the damage, your insurance coverage, and the lease contract terms. Key factors to consider include:
Insurance and Repair Obligations
Lease agreements typically require lessees to maintain comprehensive and collision coverage, ensuring repairs or replacement in case of an accident. If the vehicle sustains damage, insurance will generally cover the repair costs, but the process differs from an owned vehicle. The leasing company may have specific guidelines, including requiring repairs at authorized facilities to maintain the vehicle’s value. Many lease agreements specify that repairs must restore the car to a like-new condition, often using Original Equipment Manufacturer (OEM) parts.
If your insurance covers the repairs, you’ll still be responsible for the deductible. If another driver was at fault and their negligence caused both the accident and your injuries, their insurance should cover the damages. However, if the car is a total loss or if the at-fault driver is uninsured, you may be left dealing with the gap between the insurance payout and the remaining lease balance. Injury-related expenses will need to be handled separately, potentially through a personal injury claim.
Total Loss on a Leased Car
If the cost to repair the vehicle is too high, the insurance company may declare it a total loss rather than approve repairs. In Texas, a car is considered totaled if repair costs plus salvage value equal or exceed the car’s actual cash value (ACV), according to the total loss formula (TLF). If your leased car is totaled:
- The insurance company will pay the ACV of the vehicle to the leasing company.
- If the payout is less than your remaining lease balance, you may be responsible for covering the difference—unless you have gap insurance.
Lease Termination After an Accident
If the vehicle is declared a total loss after an accident, the lease agreement may allow for early termination, depending on the extent of the damage and the specific terms of the lease. Some leases include provisions that permit the lessee to terminate the lease without further obligations, as the insurance payout can cover the remaining lease balance. However, this option is not available in every lease, so it’s important to review the terms carefully.
How Gap Insurance Can Help
If your leased car is declared a total loss, gap insurance can cover the difference between the insurance settlement and your remaining lease balance. Without it, you could end up paying thousands of dollars out of pocket. Many leasing companies require gap insurance, but if yours does not, purchasing it separately can provide valuable financial protection.
Leased Car Accident – Not My Fault: What Happens Next?
If the accident wasn’t your fault, your insurance will usually cover the repair costs initially. The at-fault driver’s insurance should reimburse you, but if the car is a total loss, there might be a gap between the insurance payout and your remaining lease balance. Gap insurance can help cover this difference, protecting you from paying for a car you no longer have. This coverage can help ensure you’re not left with an additional financial burden after the accident.
Who Pays for Repairs and Damages After a Car Accident on a Lease?
In the event of an accident with a leased car, determining responsibility for repairs depends on the circumstances:
- At-Fault Driver: If another driver caused the accident, their insurance is responsible for covering both the repairs to the leased vehicle and any injuries you sustained. Texas follows a fault-based system, meaning the liable driver’s insurance should pay for your damages, medical expenses, and other losses. If their insurance is insufficient, you may need to file a personal injury lawsuit or use uninsured/underinsured motorist coverage.
- Leasing Company: If the leasing company provided you with a defective or improperly maintained vehicle that led to an accident, they may be liable for both vehicle damage and your injuries. If a mechanical defect or safety issue caused the crash, legal action against the leasing company or vehicle manufacturer might be necessary to recover compensation.
- Your Insurance: If you are at fault or the accident involves factors beyond another driver’s negligence, your collision coverage would handle the repairs, minus your deductible. If you were injured, your personal injury protection (PIP) or medical payments coverage (MedPay) may help cover medical expenses, but these policies have limits. For more severe injuries, a legal claim against the at-fault driver may be necessary.
Returning a Leased Car After an Accident
When it’s time to return a leased car after an accident, the leasing company will inspect the vehicle. If the car has been repaired and is in good condition, there shouldn’t be any major issues. However, if the car hasn’t been repaired properly or if the damage is significant, you might face extra charges or penalties when returning the vehicle. To avoid surprises, ensure that all necessary repairs are made and keep all records related to the accident and repairs.
How Our Car Accident Lawyers Can Help With Leased Vehicle Accidents
Dealing with a leased car after an accident involves navigating insurance claims, potential disputes with the leasing company, and liability concerns. If you suffered injuries in the accident, the legal process becomes even more complex, as you may need to pursue compensation from an at-fault driver, the leasing company, or other responsible parties. At Mokaram Injury Lawyers, we help clients recover damages for medical expenses, lost wages, and other losses while also ensuring their lease obligations are handled properly. Contact us today for expert legal guidance in protecting your rights and securing the compensation you deserve.
