How Returning a Leased Car After an Accident Works

Returning a Leased Car After an Accident

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Car accidents happen frequently, which is why there are so many online articles regarding what to do after being involved in one. However, many of these articles instruct what to do after a car accident when the vehicle is owned by the driver. But, what about when the vehicle is leased? And, how does returning a leased car after an accident work?

Here is an overview of the guidelines pertaining to leased cars and what happens when they are damaged in a crash.



The Difference Between a Car Lease and Owning

Upon purchasing or leasing, clients are briefed on their contracts, and while it may appear straightforward, there are areas in the agreement that are not always the most comprehensible.

For instance, a lease contract may state that minor damages to the vehicle will not be charged, but what is “minor”? In most cases, regular wear-and-tear, like small dents and scratches are covered.

However, leasing companies are less lenient when it comes to damages sustained in a motor vehicle accident. A leased vehicle must be repaired before returning it, as the damage clause requires leased vehicles to be returned in the same condition as they were when released.

Whereas, individuals that own are not pressured with a due date to get their vehicles repaired–granted the vehicles are in a legally drivable condition.


How a Vehicle Agreement with a Lease Company Works

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A car lease is similar to renting, as the lessee makes monthly payments in exchange for temporarily possessing the vehicle. The car lease period typically lasts between 3 and 6 years. Once the lease ends, customers have the option to:

  1. End the lease, return the vehicle to the dealership, and pay any owed fees
  2. Trade the vehicle in for another at any authorized dealership
  3. Purchase the vehicle at the residual value

Insurance Details in a Vehicle Lease

Similar to owning a car, insurance coverage is mandatory, and it would be illegal to drive without it in San Jose, CA.

Most leasing companies require “full-coverage” insurance, which may be more than the state’s minimum coverage; the most common include:

  • Bodily injury liability coverage: minimum of $25,000/person and $50,000/accident for medical bills
  • Property damage liability coverage: minimum of $10,000/accident for damaged property
  • Collision coverage: covers the cost of damage from a collision with another vehicle or an object
  • Comprehensive coverage: covers the cost of damage caused by theft, falling objects, or natural disasters

Depending on the state where the vehicle is registered and the leasing company, the amount of coverage will vary.


Gap Insurance

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Gap coverage may be required by a leasing company, as it is an additional type of insurance that covers the difference between the value of the leased vehicle and the remaining balance owed on the lease.

In the event of a total loss (when the cost of repairs exceeds the value of the vehicle) from a leased car accident, gap insurance provides additional protection to lessees from being left with the responsibility to pay for the remaining payments out-of-pocket.

If a car accident in a leased vehicle occurs, gap insurance greatly benefits policyholders.


Can I Return a Leased Car After an Accident?

A vehicle does not need to be in perfect condition in order to return it to the car dealership. However, lessees are responsible for vehicle repairs if the damages fall outside of:

  • Minor dents
  • Small scratches
  • Non-permanent interior stains
  • Tire wear-and-tear

If a negligent driver was responsible for the motor vehicle accident, then the other driver’s insurance company will be responsible for covering repair costs. However, certain actions must be taken.


7 Steps to Take After an Auto Accident in a Leased Vehicle

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The early stages of what to do after a leased car accident are similar to what to do after motor vehicle accidents. In order to avoid financial liability after being involved in an accident, follow the provided steps.

1. Prioritize Safety

Regardless of whether a vehicle is owned or leased, safety must always be a priority. After an accident, immediately move to a safe location, away from traffic.

Then, turn on the vehicle’s hazard lights to indicate to other drivers that there is a road hazard. Once in a safe space, call 911 to report the crash and request medical attention if necessary.

2. Document the Accident in a Leased Car

Documenting the accident is crucial to the insurance claim and can affect whose responsibility it will be to cover vehicle repairs. Take photos and videos of the accident scene, damage to the cars, and physical injuries.

Then, exchange contact and insurance information with the other party/parties involved. Also, collect witness statements and their contact information, as well.

3. Contact Your Own Insurance Company

Regardless of the other driver being at fault, victims must report the leased vehicle accident to their own insurance provider. This initiates the insurance claims process, and the other driver will be notified of the damages caused.

If the at-fault party has collision coverage, their insurance company pays for financial losses, which can include medical bills, a replacement vehicle, and other property damage.

4. Contact the Leasing Company

Most lease agreements require reporting when car accidents occur, but the terms will vary. Requirements can include going to a specific body shop for repairs or getting the car fixed before it can be returned.

Failure to report the accident to the leasing company may result in penalties or additional charges.

5. Review the Lease Car Agreement

A lease agreement outlines the terms of what can or must be done following a crash with a new car lease. If the vehicle can be salvaged, the agreement may require a repair estimate from an authorized body shop before actually proceeding with repairs.

In other instances, gap coverage may have to be applied if the cost of damages exceeds the value of the car.

6. Work with Authorized Vehicle Repair Shops

When getting a leased vehicle repaired, ensure they are completed properly and in compliance with the terms of the lease.

A car repaired at a non-authorized body shop can affect whether or not it can be returned to the car dealership, so ensure these details are confirmed before proceeding with any repairs.

Keep all repair documents, including receipts and invoices. Documentation proves what was done to the vehicle and protects the lessee from case disputes from leasing companies and insurance adjusters.

7. Get Legal Advice From a San Jose Law Firm

Dealing with a car accident involving a leased car can be complex. This is why it’s advisable to seek legal counsel.

An experienced attorney specializing in car accidents provides valuable guidance and legal representation from the other driver’s insurance provider and from the leasing company.


How to Determine if the Leased Car Can Be Returned

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Whether or not a leased vehicle can be returned to the dealership after an accident depends on the terms and conditions of the leasing contract, the extent of damage, and insurance coverage.

Some lease agreements allow a car to be returned early, while others require to continue making monthly payments until the repairs are completed. It’s important to review your lease agreement and consult with the leasing company to understand the available options.

This is the best way to determine if the vehicle can or cannot be returned. Once that has been confirmed, then legal action can be taken against the at-fault driver to avoid financial liability for damages.

In order to simplify the legal process and ensure compliance with the leasing company, work with experienced auto accident attorneys. They can review the lease contract and provide options for what can be done.


Understanding the Insurance Policy

Accidents involving a leased vehicle are fairly similar to regular car accidents. Essentially, after a personal injury claim is filed, the at-fault party’s auto insurance company is responsible for compensating victims for economic damages and non-economic damages.

However, coverage becomes complicated when the other driver is uninsured, is not accepting liability, or when the damages exceed the vehicle’s market value. This is why most lease agreements require drivers to carry comprehensive and collision coverage.

Comprehensive insurance typically covers damages caused by events such as theft, vandalism, or natural disasters. Collision insurance covers damages resulting from a collision with another vehicle or object.

It’s important to understand the insurance company’s policies and to consult with them for any questions regarding coverage.

Filing a Personal Injury Claim

Drivers who did not cause the car accident may have legal options to seek compensation for damages. This includes filing a personal injury claim with the other driver if he or she is guilty of negligence.

For example, impaired driving (driving under the influence) and distracted driving (texting while driving) are common forms of driver negligence. A negligent driver’s insurance company must compensate a victim for suffered losses.

Evidence from the accident scene, like a police report, photos of vehicle damage, and witness statements help prove fault. The best legal approach is to work with an experienced personal injury lawyer that specializes in car accident cases.


Additional Considerations After a Leased Car Accident

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a. Communication with the Leasing Company and Insurance Company

Throughout the process of dealing with an accident with a leased car, it’s crucial to maintain open communication with the leasing company and insurance company. Keep them updated on the status of vehicle repairs and feedback from the repair shop.

b. Financial Responsibility for Property Damage and Other Expenses

In most cases, the driver of the leased vehicle is still responsible for damages incurred in an accident, regardless of who was at fault.

This means that victims may be required to pay for the repairs or remaining lease payments, depending on the terms of the lease agreement. However, those costs can be reimbursed by the at-fault driver.

c. Work with Authorized Vehicle Repair Shops

When getting a leased vehicle repaired, ensure they are completed properly and in compliance with the terms of the lease.

A car repaired at a non-authorized body shop can affect whether or not it can be returned to the car dealership, so ensure these details are confirmed before proceeding with any repairs.

Keep all repair documents, including receipts and invoices. Documentation proves what was done to the vehicle and protects the lessee from case disputes from leasing companies and insurance adjusters.

d. End of Lease Considerations

If car repairs are extensive or the vehicle is deemed a total loss, it may affect the residual value of the car, which is the estimated value of the vehicle at the end of the lease.

This affects the options at the end of the lease, such as purchasing the vehicle or leasing another vehicle. Those who wish to purchase can apply for a car loan to buy out the leased car that is already in their possession.

For details on these various options, discuss the end-of-lease considerations with the leasing company.


Consult with a San Jose Car Accident Attorney for Help

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A car accident with a leased car requires specific considerations and steps. Reviewing the lease contract, understanding insurance coverage, and assessing property damage will determine if a leased car can be returned to the dealership.

Additionally, seeking legal help from a San Jose car accident lawyer provides victims with knowledge of how to deal with insurance claims when it comes to leased vehicles.

Valley Accident Attorneys is an experienced personal injury law firm in San Jose. If you were involved in an accident with a leased vehicle, we can help. Schedule a free consultation to learn more.


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