Nowadays, there are more people leasing cars than ever before in the United States. In a recent study, up to 27 percent of drivers now lease their vehicles instead of owning them.
Leasing a car can be the ideal situation for many drivers, but what happens when you get into a car accident with a vehicle that you technically do not own? Many people who drive leased vehicles are left wondering how does an accident affect a car lease?

What is a car lease?
A car lease is basically the term for leasing a vehicle. A leased vehicle is technically a long-term car rental, as you do not own the car immediately, and you will make monthly payments in exchange for using the car over a long period of time.
You would have to make these payments to the leasing company, and once the lease is finished, you have to return the vehicle to the company, or you can purchase it by paying the amount that is left over.
This is why so many people confuse leasing a vehicle with buying a vehicle on a loan. The difference is, when you lease a vehicle, there is no obligation or plan to purchase the car at the end of it.
On the other hand, with a car loan, you make payments towards purchasing the car over a set period of time. Leasing a car is essentially paying to borrow it for a long time, and you can choose to purchase the vehicle at the end of the lease, or return it.
What is the difference between leasing a car and owning a car?
When you lease the car, it is not actually your property. The vehicle is still owned by the leasing company that you pay every month, and you are essentially paying to borrow their property. When you own a car, you have paid for it and the car is legally yours to keep.
What happens if a leased car is involved in an accident?
If you are leasing a car, and you are in an accident, you will want to tell your insurance company as normal, but you will also need to tell the leasing company right away. As you are leasing the vehicle from the company, you have to inform them.
If you are in any accident, it is always best to swap insurance information and details with the other driver, whether you are at fault or not. Even more important, if the other driver is at fault, then it will be easier to get your insurance money to pay for repairs to your leased vehicle.
Once this is done, you may need to take the vehicle to a body shop or car garage to find out what it will cost to repair the damage to the vehicle. Your insurance company may direct you to a reputable body shop so that they can also receive an estimate of what it would cost to repair the car.
This estimate will then be what the insurance company will pay out to you to fix the vehicle, or if the vehicle is damaged beyond repair and is considered totaled. Your insurance provider will pay you what the cost is to fix the leased vehicle.
Repairing the damages is completely your responsibility, and nothing to do with the lease provider, and you are expected to take the car to the body shop and pay for the repairs. However, you should never attempt to fix the vehicle yourself, even if you fancy yourself a great mechanic, as this could go against your lease agreement.
What if my leased car is totaled?
If you are in the unfortunate situation where your leased car gets totaled, the result is a little different. Totaling a car basically means that it will cost more than 65% of the value of the vehicle to repair it, which in most cases means that it is not worth repairing. In these cases, an insurance company will declare the vehicle a total loss.
The insurance company would then pay you for the current value of the vehicle, rather than the cost for the repairs. However, you still have to pay the leasing company your outstanding balance for leasing the vehicle. For instance, you could receive $4000 dollars for the vehicle from your insurance, but you may still owe the leasing company $6000, so you have to come up with the extra $2000.
Luckily, there are ways to help you if you are caught in this situation. We recommend that you get Gap coverage with your insurance. Gap coverage is there to help cover the amount that you owe to the leasing company if you are unexpectedly in a car accident, so you are not left in an uncomfortable situation where you have to pay large sums of money for a car that is now totaled!
What should I do if I lease a car?
To avoid any problems with collisions or wreckages, you will want to make sure that you are fully covered before leasing a car. When you drive a leased vehicle, it is vital that you have the correct insurance to protect yourself in the event of a crash or an accident.
This means having the full insurance coverage to cover you when driving, and both for if you cause a crash, and if another driver crashes into you, and cannot or will not pay for damages. You will also want to ensure you have coverage that complies with the lease agreement just to cover your own back, and additionally you may need to get Gap coverage.
Luckily, many leasing companies will offer Gap coverage when you take out the lease with them to ensure that you are covered in the event of accidents whilst you are leasing the vehicle. If you ensure that you are covered by insurance properly when leasing a car, then you should have no issues in the future if there is an accident or a crash.