If you crash a leased car, you are responsible for repairing it to the leasing company's specified standards. Your primary financial protection comes from the insurance coverage you carry, specifically collision and comprehensive insurance, which are almost always required by the lease agreement. The leasing company (the lienholder) will expect the vehicle to be returned at the end of the lease term in good condition, minus normal wear and tear, which an accident repair must meet.
The process typically involves these steps:
- Immediate Action: Ensure everyone's safety, call the police, and exchange insurance information with any other drivers involved.
- Reporting: Contact your insurance company to file a claim immediately. You must also notify the leasing company, as they have a financial interest in the vehicle.
- Repairs: The insurance adjuster will assess the damage. Repairs must be performed by a reputable, often certified, auto body shop. The leasing company may require you to use their approved facilities to ensure quality work that maintains the vehicle's value.
- Costs: You are responsible for your insurance deductible. If the cost of repairs exceeds a certain percentage of the car's value (often 70-80%), the insurance company may declare it a total loss. In this case, they will pay the car's Actual Cash Value (ACV) to the leasing company. A potential gap exists if the ACV is less than the lease payoff amount (the remaining payments plus a purchase option fee); this is where gap insurance becomes critical, as it covers that difference.
Without adequate insurance, you could be personally liable for the full cost of repairs or the lease payoff amount. Always review your lease agreement and insurance policy carefully.
| Scenario | Your Primary Responsibility | Role of Insurance | Potential Financial Risk to You |
|---|
| Minor/Major Repairable Damage | Arrange for professional repairs that meet lease return standards. | Covers repair costs minus your deductible. | Cost of your insurance deductible. |
| Vehicle is Totaled | Cooperate with the insurance and leasing company's process. | Pays the car's Actual Cash Value (ACV) to the leasing company. | The difference between ACV and lease payoff if you lack gap insurance. |
| Lapse in Insurance Coverage | Still liable for all damages per your lease contract. | No coverage; you must pay out-of-pocket. | Full cost of repairs or the entire lease payoff amount. |
| Excessive Wear and Tear | Damage from accident may be classified as excessive wear. | May not cover "wear and tear" charges. | Leasing company's charges for diminished value or improper repair. |
