What Happens If You Total A Leased Car?
Leasing a car is a popular option for those who prefer having a new vehicle without the long-term commitment of ownership. However, if you find yourself in a car accident with a leased vehicle, the process and considerations differ compared to owning a car outright or having a car loan. In this article, we will guide you through the various factors to consider in such situations.
Ensure You Have Adequate Insurance
Even though you don’t own the leased vehicle, having insurance coverage is essential. It’s a legal requirement to carry Nevada’s minimum insurance, just like any other driver on the road. Currently, Nevada mandates the following minimum coverage:
- $25,000 for bodily injury liability
- $50,000 for bodily injury liability coverage per accident (when 2 or more people are injured)
- $20,000 to cover property damage
While these coverage amounts satisfy the minimum legal requirements, it’s advisable to consider additional insurance coverage, especially if you own a home or have other assets. Keep in mind that your lease agreement might specify the minimum insurance coverage you must maintain. Failure to meet these requirements could lead to contract cancellation or even legal action by the leasing company.
Contact the Appropriate Parties After an Accident
Immediately after an accident, it is crucial to notify your insurance company. Make sure to report the accident within 24 hours and provide basic information such as the accident location and the identities of all parties involved.
Additionally, you need to inform the leasing company since they are the legal owners of the vehicle. Your insurance company is not responsible for contacting the lessor on your behalf. You should have a specific number to call to report the accident and provide any necessary information required by the leasing company.
Take the Leased Car to a Body Shop
Your insurance company may recommend a preferred body shop, but you might also have the option to choose your own. Additionally, the leasing company might want to assess the vehicle after the accident. Once the car is taken to a body shop, you will receive an estimate for the repair costs.
Whether your insurance covers the repair costs depends on your policy. If you have collision or comprehensive coverage and you were not at fault for the accident, your insurance might cover the repairs. However, if you were responsible for the crash, you may have to pay for the repairs out of pocket.
What Happens If You Total A Leased Car?
If the damage to the vehicle is significant, the insurance company might deem it a total loss if the cost of repairs exceeds 65% of the car’s value. For example, if the repairs amount to $30,000 but the car’s value is only $36,000, the vehicle might be declared a total loss.
However, it’s important to note that even if your leased car is totaled, your contractual obligation to make lease payments does not disappear. This means that after a severe accident, you may end up owing money to the leasing company. In these situations, individuals with a leased car that is totaled often find themselves in a worse financial position compared to those who own their cars outright.
Check If You Have Gap Coverage
Gap coverage can be beneficial if your leased vehicle is totaled. It covers the difference between the value of the vehicle and the amount you must pay under the terms of your lease. For example, if the totaled vehicle is valued at $28,000 but you still owe $32,000 under the lease, you would need to come up with $4,000 out of your own pocket. Gap coverage can help bridge this gap, which is why it is advisable for anyone leasing a vehicle to purchase it.
Seeking Compensation When Not at Fault
If another driver is responsible for the accident, you have the right to seek compensation from them under Nevada law. For instance, if you were waiting at an intersection and another driver collided with you, you can file a lawsuit to recover damages for your injuries, medical expenses, lost wages, and pain and suffering. In such cases, you may not need to use your gap coverage as you can sue for 100% of the damage to the vehicle.
How A Leased Car Accident Attorney Can Help
After a collision, it is crucial to analyze the best approach to maximize your financial compensation while considering the terms of your lease. Not all personal injury attorneys have experience with leased vehicles, which can result in overlooking important considerations. At Naqvi Injury Law, we understand the intersection of leases and liability in car accidents. If you have been in an accident with a leased vehicle, we offer a free initial consultation to discuss your options and help you make informed decisions.
Contact Naqvi Injury Law today for expert guidance and representation in handling accidents involving leased vehicles.