Unlike owning a car outright, a leased vehicle comes with specific considerations in the event of an accident. If you’re not at fault, there are steps you need to take immediately after the incident to protect your interests and ensure a smooth resolution, including assessing the damage, contacting relevant parties, understanding the financial implications, and contacting a car accident lawyer.
At Kalikhman & Rayz, LLC, we guide clients through accidents involving leased vehicles. These situations require a nuanced understanding of both auto accident law and the specifics of lease agreements. Our firm is committed to providing thorough and personalized legal support, ensuring your rights are upheld, and you’re not unfairly burdened in situations that were not your fault.
Is it Bad to Crash a Leased Car?
Crashing a leased car introduces specific challenges that differ from those faced when an owned car is involved in an accident. With a leased vehicle, you don’t own the car; instead, you’re paying for the use of the vehicle over a certain period. This arrangement brings particular responsibilities, especially when it comes to the vehicle’s condition. In the event of an accident, regardless of fault, you are still responsible for returning the car in good condition at the end of the lease term, barring normal wear and tear.
The immediate step after an accident is to inform the leasing company and your insurance provider. The leasing company has a vested interest in the car and must be notified about any significant damages. They may have specific procedures or preferred repair shops for handling such repairs. Even if repairs are made, if the vehicle’s condition at the end of the lease is not up to the agreed standard, you may face additional charges.
When you lease a car, it’s advisable to have comprehensive insurance coverage that aligns with the leasing company’s requirements. This insurance should cover the costs of repairing the leased vehicle to the condition expected by the leasing company. It’s also important to understand the terms of your lease agreement regarding accidents and repairs, such as the early lease termination clause and the length of the lease, as these can vary between contracts.
What Happens When a Leased Car is Totaled?
If your leased car is totaled, which means the repair costs exceed a certain percentage of the car’s value, the situation can become particularly complicated. Insurance companies consider a vehicle a total loss when its repair costs would be more than its current market value. In this scenario, the insurer typically pays out the actual cash value of the vehicle.
However, there’s often a gap between the insurance payout and the remaining balance of your lease agreement. This is where GAP insurance becomes important. GAP (Guaranteed Asset Protection) insurance covers the difference between what your auto insurance pays and what you owe your leasing company. Without GAP insurance, you could be financially responsible for this difference, which can be substantial depending on the depreciation of the car and the terms of your lease.
Some lease agreements may include GAP insurance, but not all do. If your agreement doesn’t, purchasing separate GAP insurance might be a wise decision. It’s also important to communicate with your leasing company following the accident to understand your options and obligations.
What Does Total Loss Mean in Insurance?
In the context of insurance, “total loss” refers to a situation where the cost of repairing a vehicle exceeds its assessed value. This is a calculation made by the insurance company based on factors like the vehicle’s age, market value, and extent of damage. When a car is declared a total loss, the insurer decides that repairing the vehicle is not economically feasible.
The insurer typically offers a payout to compensate for the actual cash value of the vehicle at the time of the accident. This payout is the market value of the car just before the accident, minus any applicable deductible. However, this amount may not align with the remaining balance on your lease or the replacement cost of a similar new vehicle.
This discrepancy is why additional insurance coverage, such as GAP insurance, is significant for leased vehicles. Without it, you may find yourself paying out of pocket to cover the difference between the insurance payout and what you owe on the lease. To understand how insurers assess total loss in accordance with Pennsylvania law, see the Pennsylvania Motor Vehicle Financial Responsibility Law.
What Does it Mean When a Car is Totaled?
When a car is declared “totaled,” it signifies that the vehicle is damaged to the extent that repairing it is not cost-effective. The decision to total a car is typically based on a comparison between the estimated cost of repairs and the vehicle’s value before the accident. Insurance protocols use different methods to determine a car’s value, considering factors like depreciation, the car’s condition before the accident, and the local market for similar vehicles.
For leased vehicles, the situation is more complicated. When a car is totaled, the leasing company expects compensation for the loss of the vehicle. As the lessee, you are responsible for the car and may need to cover the gap between the insurance payout and the payoff amount of the lease. This financial responsibility can be mitigated with GAP insurance, which covers this shortfall.
Kalikhman & Rayz, LLC: Award-Winning Car Accident Attorneys Serving All Pennsylvania
Dealing with a leased car accident that wasn’t your fault can be difficult, especially when insurance claims and lease agreements are involved. During such challenging times, you need to have knowledgeable and empathetic legal guidance. At Kalikhman & Rayz, LLC, we walk you through each step, ensuring you understand your rights and options for a collision claim settlement.
Our firm stands by your side, offering tailored advice and strong representation. We aim to alleviate the burden of the legal process, allowing you to focus on what matters most – your recovery and peace of mind. If you’re involved in an accident in a leased car and it wasn’t your fault, contact us online or call 267-244-7902 for a consultation. We’re dedicated to protecting your interests and securing the most favorable outcome in your case.