Wrecking a leased car comes with additional steps compared to if you bought the car. You need to contact the leasing company after the accident. There may also be additional fees and penalties to contend with depending on what kind of insurance coverage you have.
In the past, people could really only buy a new car. They could either buy it outright if they had enough money saved up, or they needed to take out a loan.
You pay money every month, and after a set amount of time, you own the vehicle. At that point, you can sell it and keep the profits.
Today, many drivers choose to lease vehicles. With a lease, you essentially "rent" the car. You typically lease a vehicle for three years, and at the end of it, you choose whether to renew the lease or return it at the dealership.
Leases also come with mileage restrictions. Generally, you can only drive between 10,000 and 15,000 miles per year for the duration of the lease.
Whether you bought or leased your car, the process immediately after an accident is the same. You may worry about what this incident means for your lease. Don't worry about that for now.
The most important thing is to remain calm. There are several steps to take in the moments following a crash, and you don't want to overlook a single one.
The steps after a car accident are similar regardless of what your purchasing process was like. However, if you lease your car, then you want to make sure you get in touch with the leasing company.
The reason for this is that this company may have specific steps they want you to take for repairs. Some dealerships don't want you repairing their vehicle with aftermarket components.
There's specific language in your lease agreement about what to do in the event of an accident. Failure to comply with those requirements could result in financial penalties once your lease ends.
When you lease a car, you're still required to have the minimum insurance requirements set forth by your state. Your insurance policy should cover most or all of the damages to the vehicle.
The main difference is that the leasing company may have instructions for how to repair the car. You may need to go to a specific shop or even take it into the dealership itself for repairs.
Therefore, you should still file a claim even though you don't technically own the car. You may still be entitled to certain damages if you suffered injuries from the crash.
If you are at-fault, then you or your insurance company are responsible for damages. The other driver can file a claim with your insurance agency, and the company typically settles for some amount.
After that, you can expect your insurance rates to increase. Some insurance companies offer accident forgiveness, which keeps your rates the same even if you're responsible for a wreck.
When it comes to a leased vehicle, you're still responsible for making payments even if it was totaled. The insurance generally covers this amount, but there may be certain fees you're still responsible for.
This is why it's good to have guaranteed asset protection (GAP) coverage. Through this, you fulfill your financial obligations to the leasing company. With the right protections, you end up paying little or nothing at all if anything ever happens to the leased vehicle.
If you're not sure, consider comparing different insurance providers to your own to find out who's able to provide you with the level of protection you need. Don't get caught on unprepared in the life-altering car accident.