Skip to Main Content

What Happens If You Total A Leased Car?

Leasing a car is a popular way of making sure you always have a new car in your driveway. Put simply, a lease is just a long-term rental agreement. You make an initial payment and then regular monthly payments for a set number of years. At the end of the leasing agreement, you return the vehicle to the lessor. If you drove an unusual number of miles, or if your car had serious wear and tear, you might need to pay more money. Many leases come with the option to buy, though you don’t have to buy the car if you don’t want to, and many people simply sign a lease for a new vehicle.

But what happens if you get in a car accident with a leased vehicle? What happens if your leased car is totaled? Getting into an accident with a leased vehicle is a little different from being involved in an accident with a car you own outright or subject to a car loan. In this article, we’ll walk through the different considerations.

Ensure You Have Adequate Insurance

The fact that you don’t own the vehicle you are driving does not mean you can get away without having insurance. In fact, the opposite is true. You need to carry Nevada’s minimum insurance, just like other motorists out on the road. Currently, Nevada requires that all people registering a vehicle have the following:

  • $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

This insurance covers other people who are injured by your own negligence. It does not cover you if you are responsible for the crash.

Motorists always have the option to buy more insurance, which is a good deal, especially if you own your home or have other assets. At the end of the day, $25,000 isn’t a lot of money to cover the financial losses of a moderate or severe crash. More insurance gives you greater protection because some injured victims might sue you personally.

When shopping for insurance, take a look at your lease agreement. It could state what insurance you need in order to comply with the terms of the lease. If you don’t get the minimum coverage required, the leasing company could cancel your contract or possibly even sue you.

Contact The Right Parties After An Accident

Your insurer definitely wants to be notified of any accident you get into, so make sure to call very soon after the accident, usually within 24 hours. You can provide basic information, such as where the accident happened and the identities of those involved.

You’ll also need to contact the leasing company, which still owns the car. Don’t expect your insurer to contact the lessor for you. There should be a number you can call to report the accident and provide other required information.

Take The Car To A Body Shop

Your insurer might recommend that you take the car to a body shop or you might be able to pick your own. Also check with the leasing company, which might want to look at the car after the accident. You will receive an estimate for how much it costs to repair your vehicle.

Your insurance might or might not cover the cost of repairs. If you have collision or comprehensive, then the accident might be covered. If you were ultimately responsible for the crash, however, then you might have to pay for repairs out of your own pocket.

What Happens If You Total A Leased Car?

One problem arises when a vehicle gets totaled. Generally, an insurer will write off a car as a total loss if it needs to pay more than 65% of the car’s value to repair it. If the car needs $30,000 in repairs but is only worth $36,000, then the vehicle might be declared a total loss.

Remember, however, that you are contractually obligated to make payments to the leasing company, and this obligation does not disappear simply because your leased car is totaled. Instead, many people end up owing to the leasing company money after a bad accident. This means that many people end up further behind financially if a leased car was totaled than they would have ended up  had their own car been totaled.

Check If You Have Gap Coverage

Gap coverage helps if your leased vehicle is totaled. It covers the gap between the value of the vehicle and the amount of money that you must pay under the terms of your lease. For example, the totaled vehicle might only be worth $28,000. But, if you owe $32,000 under the lease, then you need to come up with $4,000 of your own. Gap coverage can step in and cover this amount, which is why anyone who leases a vehicle should purchase it.

Receiving Compensation If You Are Not At Fault For The Accident

If someone else rammed into you, then you could sue them for compensation under Nevada law. For example, you might have been sitting at an intersection when someone rams you. If your suit is successful, you can receive money to cover economic losses stemming from your personal injuries, such as medical care and lost wages. You can also receive money for pain and suffering.

You might also receive money to repair the vehicle. Generally, you should be able to sue for 100% of the damage to the vehicle. If successful, you might not even need to use your gap coverage.

How A Leased Car Accident Attorney Can Help

After a collision, you need to analyze the best way to obtain maximum financial compensation, taking into consideration the terms of your lease. Some car accident attorneys do not have experience with leased vehicles, so they do not evaluate all relevant considerations. As a result, their clients could end up making the wrong choice and paying more than is necessary.

At Naqvi Injury Law, we understand how leases intersect with liability issues involved in car accidents. We would be pleased to discuss your options with you if you reach out to us. We offer a free initial consultation.