What Happens if You Total a Leased Car?

What Happens if You Total a Leased Car?

Auto insurance helps cover large financial expenses that result from serious damages or car crashes, but what happens if you total a leased car in Arizona? It's important to know what to expect and what to do in this situation because it can have a major impact on your financial future.

What Happens If Your Leased Car Is Totaled?

Any type of vehicle damage can be serious, but totaling a leased car can leave you with bills to pay even though you no longer have a vehicle to drive. It's helpful to understand this process if you are leasing a car or plan to in the future. 

Determining If a Leased Car Is a Total Loss

For a car to be a total loss, the cost to repair it must be higher than the current value of the car. Most insurance companies in Arizona consider a vehicle with damages that total at least 70% of the vehicle's actual cash value to be a total loss. 

Identifying Who Pays for a Leased Car Accident

Many people understand that when they own a vehicle, they are financially responsible for most major expenses. However, what happens if you total a leased car that you do not own? 

Even though the vehicle is beyond repair, you must still pay the remaining balance on your lease. Your contract may also require you to pay other costs since the car is no longer operable and can't be leased out to another client. Depending on your insurance coverage, you may be on the hook for thousands of dollars with nothing to show for it.

If your leased car is totaled and you are not at fault, the at-fault party's insurance should pay the value of the vehicle. However, the other party's insurance will only pay the value of the vehicle or the policy limits which may still leave you with a balance to pay.

The Role of Gap Insurance or Lease Payoff Coverage

Because vehicles depreciate quickly, many people owe more money on their lease than the car is worth. Gap insurance or lease payoff coverage pays the difference between what your leased car is worth and the remaining balance on your lease. 

Some lease agreements include gap insurance and some people purchase the coverage separately. If you have gap coverage, you need to file a claim with the gap insurance provider when your vehicle becomes a total loss.

Steps to Take After You Total a Leased Car in an Accident

Car crashes in Arizona are common. Almost 120,000 crashes occurred in the year 2022. If you lease your car and get in a serious accident that has likely totaled your vehicle, follow these important steps.

1. Start With Scene Safety

Your health and safety and that of the other people involved are the top priority. Make sure you are in a safe place and attend to any medical issues. Contact emergency services if you or another person suffered a confirmed or suspected serious injury.

2. Gather the Pertinent Information

Record the exact time and take detailed photos and notes as soon as possible. Get names, license plate numbers, phone numbers, and insurance information from others involved in the accident. Be sure to write down any significatn crash-related information.

3. Contact a Lawyer

You need to let your auto insurance company and your leasing company know about the accident, but it is a good idea to contact a Phoenix car accident lawyer first. Your lawyer can contact your insurance and leasing companies for you and safeguard your interests. Whether you are at fault or not, it's wise to get legal support any time you're in an automobile accident, especially when the accident involves a leased vehicle..

Help With Your Leased Car After a Total Loss

If you're wondering what happens if you total a leased car and how it will affect your future, contact us today at Sargon Law Group. Our team of Phoenix personal injury lawyers help clients in the Maricopa County area during the aftermath of a crash get the support they need to get back to everyday life.