You have been in an accident in your leased vehicle now what?  The insurance company has deemed your car a total loss.  Not only are you suffering with physical injuries now you are faced with dealing with a leasing company and the insurance company to determine what is going to happen.    The controlling document is the lease agreement.  The lease agreement will spell out what will happen in this situation.  Some agreements will allows any equity to be returned to you, while other agreements will allow the leasing company to keep any monies above and beyond the value of the car.  Be sure to keep a copy of your lease in a safe spot.  Additionally the insurance company will require a copy of the lease to settle the property damage portion of the claim if you do not have one readily available the insurance company will have you give them permission to speak with the leasing company, which will further delay the process.  You may also be required to pay your deductible.  Be aware of what you are signing and make sure that you have all your concerns and questions answered before entering into any agreements.  Keep your account number handy and a phone number to reach the  leasing company so that you can communicate with them effectively and get the property damage resolved quickly and efficiently.

The Dreaded Upside Down Totaled Car

The car insurance company will pay the cash value of a totaled car, which is what it would cost to buy the same car as a used car from a dealer. Unfortunately, your used lease car has a market value worth much less than the new price, and the payoff amount on a lease does not drop as fast as the car’s value does. Typically, when a lease car is totaled, the lease payoff will be higher than the amount the insurance will pay for the car. Sometimes the difference can be thousands of dollars that you need to come up with to pay off the lease.

Gap Insurance Covers the Shortfall

Gap insurance is the type that pays the difference between the lease payoff amount and the regular insurance coverage value when a leased car is totaled. Some lease contracts automatically include gap coverage, so check your lease paperwork if your car is wrecked to determine if the leasing company will cover the gap. If you have leased and did not buy gap coverage or have it included in the lease, you can buy gap coverage at any time directly from insurance companies and brokers. Gap insurance must be purchased before the leased car is wrecked, however.