What happens if you have an accident with a leased car?

Most of the steps to follow an accident are the same regardless of whether you lease, finance, or own your car outright. The consequences of the accident vary depending on the car's current value and how far along in the lease period you are.

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What to do after a leased car accident

After a car accident, even when you crash a leased car, your first step should be to determine whether anyone is hurt. Then, call 911 and report the accident to the police. Next, you'll need to call your insurance company. Many insurance policies have language requiring you to report any accidents.

Finally, call your lease company to report the accident. The leasing company is the vehicle's legal owner. Your lease may specify when you must report the accident to the leasing company. Check the details of your lease agreement to make sure you report it in time.

When you crash a leased car, the leasing company may require you to repair the car — unless the vehicle is totaled. Learn more about how to file an auto insurance claim and the requirements for insuring a leased car.

What happens if you total your leased car?

In most states, a total loss means the cost to repair your vehicle is more than its value, so it's not worth repairing. In this case, your lease will end once the valuation is completed and the insurance company pays the leasing company the car's actual cash value, minus any applicable deductible. Learn more about what happens when your car is totaled.

If the total loss payment is less than what you owe on the lease, you'll need to pay the difference unless you have gap insurance. If the insurance payout is more than what you owe to the leasing company, the balance should be paid to you.

Pro tip:

In most states, Progressive offers loan/lease payoff coverage, similar to gap coverage but with a few key differences. One of the main differences is that the payout for loan/lease payoff coverage is limited to no more than 25% of your vehicle's value. However, the exact limit varies by state. Loan/lease payoff also doesn't cover any additional charges related to a loan or lease, such as finance and excess mileage charges.

How does gap insurance help with a leased car accident?

Gap insurance is coverage that comes into play when a car is totaled or stolen. It covers the difference between your car's value and the remaining balance on your loan or lease. Many lease agreements include gap insurance, but they might refer to it as, "waiver of responsibility in case of loss."

If your lease agreement does not include gap insurance, you may be able to add similar coverage to your auto insurance policy. For example, Progressive offers loan/lease payoff coverage which can pay up to 25% of your vehicle's value toward your outstanding loan or lease balance.

If your leased car is declared a total loss after an accident, contact your gap insurance provider with copies of your paperwork (lease agreement, gap insurance contract, police reports, etc.) and follow their instructions on how to file a gap insurance claim.

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