When you lease a car, the terms of the policy differ somewhat from those if you owned it. To put it another way, when dealing with an automobile insurance claim, things can get a little more difficult. While a lease agreement allows you to drive and own the vehicle for the duration of the lease, it still belongs to them. Your car is still under the lease company’s ownership for the duration of the lease, even if the agreement provides you with a purchase option at the end.
What to do When in an Accident in a Leased Car
In the case of an accident, your lease contract’s conditions will determine what your next move should be. If your automobile is damaged, you may be required to document the damage and have it evaluated by a pre-approved auto repair shop recommended by the leasing company. The service center will then provide an estimated cost of repair for the car based on your insurance claim filing.
The sort of car insurance coverage you have will determine the next stage in the process. After a vehicle is involved in an accident it must be repaired. In the majority of situations, you or the body shop will be paid to repair the vehicle. This sum will be calculated by deducting your deductible. If the car has $3,000 in damage and your deductible is $300, you’ll get $2,700 to fix it, for example.
Although state law requires that all drivers have at least the minimum required auto insurance coverage, most leased cars will force the driver to accept any policy offered by the lessor. If you don’t have the cash to purchase a new vehicle or improve your existing one, leasing may be an option. Leasing companies will want you to fulfill much stricter minimal criteria than those specified by the manufacturer, such as liability and property damage coverage, as well as collision and comprehensive insurance. It’s also a good idea to get more comprehensive coverage on your leased car if it has an accident, is stolen or badly damaged, and the vehicle can be fixed or replaced without incurring large out-of-pocket expenses for you.
How Can Gap Insurance Help?
When your leased automobile is declared a “total loss,” insurance companies are frequently unable to calculate the vehicle’s real cash value, leaving them to pay out far less than what was owed under the lease. Unfortunately, the actual cash value of the vehicle would seldom be sufficient enough to cover everything outstanding as part of the auto lease.
Because the “gap” between what the insurance company will pay for the vehicle and what you are owed may be a significant amount, gap insurance is an attractive option. This type of insurance will reimburse you the difference between what you owe on the lease and the real cash value of the car. It’s also conceivable that your leasing firm will demand gap insurance in exchange for your contract. So, if you opt to lease a car, keep it simple. Double-check that you understand all of your lease obligations before signing.
Could you be overpaying for auto insurance? Compare car insurance quotes today with Insurance Navy. Call us at 888-949-6289 or request your free quote online to see how much you could be saving. If you need further assistance, feel free to stop in at one of our storefronts to speak with an insurance expert in person.