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What Happens If You Total a Leased Car?

Colburn Law

When you lease a car, you enjoy the benefits of driving a vehicle without the long-term commitment of ownership. However, what happens if the leased car is involved in an accident and deemed totaled? In such cases, the financial implications can be significant. 

Should you find yourself involved in a leased car accident in Washington state, the personal injury lawyers of Colburn Law can help you navigate the legal aftermath. From understanding lease agreements to navigating insurance coverage, it is important to understand what happens in the aftermath of totaling a leased car and the steps you need to take to protect your interests. 

What Happens If You Total a Leased Car?

When Is a Leased Car Considered Totaled?

When you lease a car, you sign an agreement with a leasing company to pay a small amount every month to drive the vehicle. You do not own the vehicle; the arrangement is similar to renting a car but usually for a longer period. Under most lease agreements, you are required to return the vehicle in serviceable condition, or the company will demand that you pay the remaining balance on your lease.

After an accident, the insurance company typically determines whether a car is totaled. In most cases, the insurer will consider a vehicle to be totaled if the cost of repairs exceeds 65% of the car’s value. 

Who Pays After an Accident Involving a Leased Car?

If you total a leased car, your leasing company will likely require you to pay the rest of your lease payments. In these situations, your personal insurance coverage will likely pay for the damage—up to your policy limits.

In Washington, all drivers are required to carry liability insurance coverage in the following amounts:

  • $25,000 for bodily injury or death of one person per accident
  • $50,000 for bodily injuries or death of two or more people per accident
  • $10,000 for property damage per accident

If you purchase the minimum coverage for property damage, it may not be enough to pay for the remaining lease payments. Additionally, your insurance will likely only pay for the vehicle’s fair market value, which may also fall below the lease balance. You would be on the hook for the rest of the payments.

For these reasons, it may be a good idea to invest in gap insurance when signing a lease agreement. This coverage pays for the difference between the lease balance and the compensation provided by your insurance company, helping you settle the lease.

What Steps Should You Take After Totaling a Leased Car?

If you are involved in any type of car accident, your priority should be your safety and your well-being. Take the following steps to protect yourself and to also preserve evidence for a future insurance claim or lawsuit:

  • Call 911 to report the accident to the police.
  • Seek medical attention for any injuries that you sustained in the car accident.
  • Document evidence by taking photographs and videos of the accident scene. 
  • Collect contact information from the at-fault driver and any witnesses in the area.

Once you have taken these steps, you should report the crash to your leasing company and your insurance company as soon as possible. However, it is a good idea to contact a personal injury lawyer before speaking to an insurance or leasing company representative. 

An attorney can protect your interests in these situations, advocating aggressively for your right to compensation. Schedule a free case consultation as soon as possible to discuss your accident and plan your next steps.