Your damaged or, even worse, inoperable rental automobile lies on the shoulder of the road.
If you have an issue, it’s probably because you signed a lease without fully understanding its terms.
Even if you’re leasing the vehicle, you’re responsible for any damages that result from an accident, just as if you’d bought it outright. Leasing a wrecked car can make an already difficult situation even more complicated.
You should know any distinctions between leasing and buying a vehicle before getting into an accident. Although foreknowledge is preferable, knowledge acquired later is still preferable to ignorance.
However, there are situations when those distinctions are meaningless. Avoiding an out-of-pocket payment is possible, but only if you take safeguards against more severe incidents than minor scrapes and scrapes.
If you don’t take those safety measures, you may not only be blindsided by the other vehicle in an accident or a stray deer on a dark night.
What is Car Leasing?
One does not need a credit check or a large down payment to sign a lease on a car for an extended period. However, both the initial leasing payment and subsequent monthly payments are mandatory. At the end of your lease, you may either return the vehicle to the leasing company or purchase it outright at the purchase price specified in your lease agreement.
During the term of the lease, you will not be the official owner of the vehicle. This means that the monthly lease payment is applied to the cost of using the vehicle rather than the cost of purchasing it outright. While the car is in your possession, you must keep it in operating condition.
Leasing a Car Requires Insurance
In Canada, having auto insurance is a legal requirement for drivers who own, finance, or lease a vehicle. All rented vehicles must have liability coverage in the event of an accident. Up to the policy’s limits, this helps pay for the medical expenses, property repairs, and other damages incurred by victims of an at-fault motorist. Drivers must have at least $200,000 in liability insurance coverage for third-party claims. Check the cheapest car insurance quote in Indiana.
Collision and comprehensive insurance are often stipulated in leasing agreements. While collision insurance can help repair costs after an accident, comprehensive insurance can help with expenses unrelated to collisions, such as theft, vandalism, etc.
An uninsured motorist policy will kick in to protect you from financial ruin in an accident caused by a motorist who does not have car insurance or has insufficient coverage.
That’s why you must review your lease to ensure you’re covered by the minimum auto insurance stipulated. Increases in coverage limitations are a common practice among motorists.
The Proper Way to Handle an Accident While Driving a Leased Vehicle
Even if the damage to your leased vehicle seems minor, you must report it to the police. A police report could help determine what happened and who was at fault. If you’ve hurt yourself, it’s for the best that you get checked out by a doctor.
Ensure that you and the other driver or party exchange contact and vehicle insurance information. Take pictures of the scene, your injuries, the damage to your rented car and other vehicles, and anything else that might be helpful.
Notifying the leasing company as soon as possible about the accident is also essential for avoiding financial penalties after the lease. The lease terms may specify the extent of allowable repairs or the conditions under which the vehicle is considered a total loss.
You must also inform your automobile insurance carrier about the incident. A lawyer can handle all the necessary communication with the insurance company and make filing a claim much less hassle for you.
Can I Count on Financial Support for Auto Repairs?
If the damage to your leased vehicle may be rectified, you must continue making payments until the car is repaired and again road-worthy. The insurance policy’s provisions will determine whether or not the costs of repairs are covered.
You may sometimes be restricted to having your vehicle serviced at factory-approved service centers or other officially sanctioned repair facilities. If the leased vehicle needs repairs, the repairs may need to be completed using only factory-fresh, manufacturer-approved parts and not aftermarket or generic alternatives.
What Happens If the Leased Car Is Totaled?
If your leased vehicle is destroyed in an accident, you must continue making payments until the claim is resolved.
If the repair cost exceeds a predetermined proportion of its current market worth, your insurance provider may declare your vehicle a total loss. In such cases, the insurance firm will compensate the lessor for the car’s current market value.
However, the insurance company’s compensation is frequently not enough to cover the whole amount of the lease’s outstanding obligations, leaving you accountable for the difference. Gap insurance can assist in compensating for this shortfall.
Knowing the lease’s terms in advance can help you prevent problems at the end of the contract, as can consulting with a lawyer who has experience handling the legalities of leased vehicle accidents.