If you total a leased car, you are still responsible for making your monthly payments until the car\u2019s value is paid off to the lessor. But your insurance may cover the full value of the wrecked car, in which case you\u2019ll be free and clear of any further financial responsibility.<\/p>\n\n\n\n
QUICK LOOK<\/span><\/span><\/div>\n\n
- If you total a leased car, your insurance may cover the full value of the car, but you won\u2019t get back any money you put into the lease.<\/li>\n\n\n\n
- If insurance doesn\u2019t cover the full value of the car, you are responsible for paying the remaining balance to the lessor.<\/li>\n\n\n\n
- Responsibility for paying for leased vehicle repairs ultimately lands on the lessee.<\/li>\n\n\n\n
- Additional car insurance coverage, like gap insurance, is recommended for those leasing a car to protect against financial losses in total loss accidents.<\/li>\n<\/ul>\n<\/div><\/blockquote>\n\n\n\n
What happens if you total a leased car?<\/h2>\n\n\n\n
If your leased car is totaled, your lessor is entitled to the fair market value of the totaled vehicle. Your car insurance may cover this cost entirely, in which case, you\u2019re off the hook for any further payments.<\/p>\n\n\n\n
That\u2019s the good news. The bad news is you will not get back any money that you have put into the leased vehicle, including monthly payments and down payments.<\/p>\n\n\n\n
And if your car insurance company does not cover the full fair market value of the car, you are responsible for the shortfall.<\/p>\n\n\n\n
For example:<\/strong> If the fair market cash value of your car is $20,000, but your insurance company only pays out $17,000, you are responsible for paying the remaining $3,000 to your lessor.<\/p>\n\n\n\n
In this case, you will still be on the hook for your regular monthly lease payments until the end of the lease term or until the car\u2019s title has been cleared (i.e., paid off).<\/p>\n\n\n\n
When is a vehicle considered totaled?<\/h2>\n\n\n\n
A vehicle is considered a total loss when the cost of repairs is higher than the actual cash value of the vehicle prior to the accident. Following a car crash, an insurance claims adjuster from your insurance provider will inspect your vehicle to assess the damage and determine if you have a totaled car or \u201cwrite-off.\u201d<\/p>\n\n\n\n
Who pays after a leased car accident?<\/h2>\n\n\n\n
You are ultimately responsible for paying for any repairs to your leased vehicle. However, where you get the money to pay for them will depend on who was at fault in the accident that caused the damage as well as how much and what types of insurance both you and the other driver carry.<\/p>\n\n\n\n
If you\u2019re in an accident with another driver, and you\u2019re not at fault, the other driver\u2019s liability coverage will pay for the damages to your leased vehicle and your medical bills up to their insurance policy limits.<\/p>\n\n\n\n
If these limits don\u2019t cover the full cost of your repairs or the full cash value of the vehicle in a total-loss situation, your collision coverage kicks in, or you\u2019ll be on the hook for the remaining balance\u2014unless you\u2019ve purchased gap insurance.<\/p>\n\n\n\n
Worst case scenario: <\/strong>If your lender doesn\u2019t require full-coverage, and you opt to carry insurance coverage that\u2019s only in line with your state\u2019s minimum insurance requirements, you\u2019ll be paying out of pocket for the full cash value of your leased vehicle if you were at fault, in a single-vehicle accident, or your leased car is totaled by something other than a collision.<\/p>\n\n\n\n
What car insurance do you need when driving a leased car?<\/h2>\n\n\n\n
When you lease a car from a dealership, you\u2019ll need to purchase auto insurance.<\/p>\n\n\n\n
Most states require motorists to carry some form of car insurance, typically third-party liability insurance to cover bodily injury and property damage. But some states also require drivers to carry uninsured motorist coverage<\/a>, personal injury protection, or both.<\/p>\n\n\n\n
If you are leasing your vehicle, your leasing company will likely require you to purchase additional insurance beyond the state minimum liability coverage\u2014usually collision coverage <\/a>and comprehensive coverage<\/a>.<\/p>\n\n\n\n
\n
- Collision coverage pays for damage to your vehicle following an at-fault accident with another vehicle.<\/li>\n\n\n\n
- Comprehensive coverage protects you against non-collision damage from things like falling objects, water, hail, and vandalism.<\/li>\n<\/ul>\n\n\n\n