Leased Car Accidents

People who lease cars can find certain security over those who choose to go the more traditional route in buying their vehicles. An argument for leasing a car says that because cars depreciate immediately after you drive them off the lot, you are financing a piece of property that will likely never accumulate equity or increase in value throughout ownership.

Due to wear and tear on your car, this asset becomes a liability, with regular maintenance, upkeep, and parts wearing out, which will continue to drain your finances over time.

A leased car is just as vulnerable to getting into an accident as any car you purchase, but there are some pitfalls to look out for, which may require the help of a car accident attorney, especially if you are involved in a leased car accident.

What happens if you crash a leased car?

When you lease a car, you get the benefits of owning a relatively new vehicle without the burden of having a piece of property that decreases in value. When the lease expires, you can start another lease or simply buy off the remainder of the vehicle’s value if you like it.

A lease agreement can vary from place to place, which may entail dents, scratches, or dings to accrue a penalty fee against your deposit. What happens if you wreck a leased car and it is considered a total loss can draw even greater penalties.

How does an accident affect a car lease?

Depending on the lease, you may have agreed to any number of penalties. Leasing your vehicle means you agree to anything from regular oil changes (and where you do them) to the number of miles you may drive during the lease.

Since you don’t own the vehicle but lease it from the owner, these stipulations protect the property you use during the lease term. An accident affects the value of the leaseholder’s property. Your car lease should completely outline how an accident affects a car lease.

Lease versus buy

Buying a car outright allows some latitude as far as how you choose to handle an automobile accident. Auto insurance is usually compulsory, and driving an uninsured vehicle is a moving violation.

Suppose you can buy a vehicle. In that case, it is up to you whether or not you go with carrying just liability insurance, or if you opt instead for full coverage, you can get market value for your car regardless of who is at fault in an accident. Financing a vehicle usually requires full coverage for your vehicle since the car is the property of the bank that is financing the loan until you pay it off.

Leasing your vehicle is closer to financing your car since another party owns it, and you are responsible for its care, upkeep, mileage, and any damage to the vehicle. The entity you lease the vehicle from may require full coverage insurance and other means of protecting their investment.

What does the lease demand of you?

Leasing your vehicle will usually require that you carry these types of insurance:

  • Liability insurance: This insurance pays for damage and injury to other vehicles and medical expenses if you are determined to be at fault in an accident. Since everyone is required to carry at least liability insurance, the concept works out that one person’s insurance will cover the other in an accident. Of course, this doesn’t always work out, especially if the other motorist isn’t insured.
  • Uninsured motorist insurance: This insurance will cover damages and medical expenses if the other driver doesn’t have insurance or leaves the accident scene. It especially helps in hit-and-run accidents.
  • No-fault insurance: Regardless of who was at fault for the accident, this coverage provides compensation for losses and medical expenses, damages, and even wages lost from time missed at work due to injury.
  • Gap insurance: As with purchasing a new car and financing it through a bank or a credit union, a condition of your lease may be to have gap insurance for your vehicle. Since vehicles depreciate rather quickly, your primary insurance may limit payments to the comparative value of other cars on a used market, deductibles, and lowballing the replacement value of your vehicle. Gap insurance allows for replacement value and often a 10 percent or higher added value to quickly get you into a replacement vehicle.

Complex system

If you have totaled your vehicle, the process when you lease vs. when you buy is a little bit more complicated since you are dealing with damages to someone else’s property. If you crash a vehicle you are financing, the insurance company will typically cut a check that covers the value of the vehicle, which you will pay to the bank carrying your title. You or gap insurance must cover the difference, if any.

With a leased car, things are different.

As with any accident, you should notify the police at the time of the accident. The officers investigating the accident provide crucial information you can use during the settlement process, with insurance, and in a courtroom if necessary. First responders such as Police, EMTs, and Firefighters will not only be able to assess and treat injuries but establish a timeline and scenario for the events of the accident.

Exchanging insurance information is the next important step in the process, regardless of renting, leasing, financing, or owning your vehicle free and clear.

Promptly contacting your insurance agent and documenting the damage done to the vehicle in the accident will establish the validity of the damages and whether or not the repair cost exceeds the appraised value of the vehicle. This will protect you during the claims process from the other driver’s insurance and the company you lease the car from.

What happens if you crash a leased car requires contacting the company you are leasing from immediately. Because it is their investment, they will want to control the settlement amount from your insurer and apply any penalties or fees you agreed to in the lease.

A total loss means that repairs would cost more than the replacement value. This is important to the company you are leasing your vehicle from because of the amount of overhead they stand to lose with a total loss. There are hidden expenses to a company like this, such as time lost purchasing a new vehicle to lease and processing the vehicle after a loss.

As you can see, with so many moving parts in the process, contacting an attorney can save you time and energy while communicating with insurance companies, leasing companies, and even hospitals.

Conditions of repair

If the vehicle isn’t a total loss, the company you are leasing from has the final say as to who will do the repairs and bodywork. They might have an in-house technician or a third-party preference who does the work.

Taking matters into your own hands is not likely acceptable, and no doubt, doing any work yourself, no matter how minor, will likely violate the terms of your lease. A leasing company has a right to protect its property. Communication with your leasing company and adhering to the conditions of the lease will protect you from possible penalties or fees.

One problem you might face is not having the same shop covered by your insurance company that the leasing company requires you to use. In which case, you might be looking at some serious out-of-pocket expenses. This is another good reason to contact an attorney to facilitate the smooth operation of the process in the aftermath of an accident, especially if the leasing company seems to be profiting from not using your insurance with an in-house body/mechanic tech.

Personal injuries

As with any personal injury, hiring an attorney can help you navigate the potentially complex problems which may arise. With a leased vehicle, you might even run into problems where the maintenance and condition of your vehicle was something beyond your control, leaving you vulnerable to liability issues when it was no fault of your own.

In cases where making changes or configuration of your vehicle violates the terms of your lease, you might be caught between a rock and a hard place, especially if this contributed to any injuries to yourself or other parties. An example of this might be improper window tinting, negligence in mechanical work, or even improperly inflated tires or cheap brakes. Since you are in less control of these, they might have contributed to injuring yourself or others.

Types of injuries sustained in an auto accident

Just as with any other vehicle, rented, leased, or purchased, you have the option to file personal injury claims, recover losses to property, time at work, and even compensation for hospitalization and long-term or permanent injuries. Here are a few injuries that could have resulted from your auto accident.

An attorney can help you with this process, especially since you will be fighting to recover your health and need help fighting insurance companies and leasing companies for compensation if necessary.

Even though the leasing company wants their property replaced, you need someone who will fight for your rights and get you the compensation you deserve.

  • Broken bones
  • Lacerations
  • Concussions/Traumatic brain injuries
  • Whiplash
  • Paralysis
  • Dismemberment/disfigurement
  • Loss of motor function
  • Loss of cognitive function
  • Post-traumatic stress disorder
  • Death


After the dust settles, you and anyone else injured will still need to recover from the accident. A leasing company might only care about having their property replaced and might rush the process so they can get another vehicle in their fleet. Meanwhile, you and other injured parties are still facing the uphill battle of recovering from injuries, lost time at work, and physical/cognitive rehabilitation.

Fast-tracking the process may cut short the time needed to better assess what you need for your recovery. Time lost at work, surgeries, therapy, and pain management should all be considered more than a wrecked chunk of glass and steel. With a third party involved, such as a leasing company, your rights need protection at this time more than ever. Contacting an attorney is the first step in ensuring the process works to protect you.

After signing a settlement release, what happens next?

Personal injury attorney Andrew Finkelstein managing partner of Jacoby and Meyers LLP

Andrew G. Finkelstein, Car Accident Lawyer

The process ends, and any monetary compensation offered by the insurance company and any fees or penalties estimated by the leasing company are a done deal. Your insurance will likely try to offer as little as possible to protect their bottom line. You might not even get enough to cover the penalties associated with the lease agreement for an accident. With mounting hospital bills, expenses, and the potential of dealing with life-altering injuries, whatever you agree to is likely what you will have to live with for the rest of your life.

Contact an attorney

If you are saying to yourself, “This lease car accident is not my fault,” you need to contact an attorney to see how your rights need to be protected. With the confusion of hospital stays, expensive surgeries, and the pain and suffering of living with the aftermath of an accident that is not your fault, your rights need to be protected.

An attorney knows the system and can turn a potentially confusing and frustrating process into something more manageable during these hard times. Hiring an attorney simplifies a very nuanced, and at times extremely complicated process.