A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for using an asset. You can lease real estate, office space, cars, and wedding dresses! You possess the asset (in our case, the vehicle) for the lease term, but you do not own it. Even if the lease agreement contains an option to purchase the car at the end of the lease, you still do not own the vehicle for the duration of the lease.
So, what happens if you’re involved in an accident in your leased vehicle? While much of the process is the same with a leased vehicle as with a car you own, some unique legal issues can arise. While you don’t technically own the vehicle, you are most likely responsible for damages from a car accident. You will find that the lease agreement terms will determine what you are required to do and explain your obligations to the leasing company.
In most cases, you are responsible for ensuring the vehicle has insurance covering its purchased price. Most leasing companies require you to carry at least $100,000 for bodily injury for one person, $300,000 for multiple people, and at least $50,000 for property damage. With leased vehicles, extensive coverage above and beyond the mandatory minimums is recommended to protect you if an accident occurs.
If you are involved in an accident, you will need to document the damage to the car. If possible, take pictures and obtain copies of police reports. You can submit these to your insurance company. Additionally, take the vehicle to an automotive service center designated by the leasing company so they can assess the total damage of the car and provide an estimate of how much the repair will cost. This documentation is essential when filing insurance claims.
When the leasing company receives the report and repair estimate, you should receive the funds to fix the car. Unfortunately, the process isn’t always this simple. For example, if you are in an accident and your leased vehicle is “totaled,” the insurance company (yours or the other driver’s) will likely be responsible for the “actual cash value” of the car. But, if the cash value is insufficient to cover the remainder of what you owe for the car’s lease, you may have to pay the difference. Investing in a gap insurance policy can help make up the difference between what is owed and the car’s actual value.
You must thoroughly understand the terms of your leasing agreement right from the start. Accidents involving a leased vehicle can be complicated. Let the Sacramento car accident lawyer at Eason & Tambornini, A Law Corporation, help you navigate the process to receive your compensation.
