Leasing a vehicle has many benefits. You can drive a newer vehicle without the financial responsibility of owning a brand new vehicle. Yet, there are some unique things to be aware of when you drive a leased vehicle. It is important to know the impact a lease agreement can have on an insurance claim in an accident.
Below, our licensed South Bend car accident lawyers discuss the differences in how your claim could be handled if a leased vehicle is damaged or becomes totaled. Let us review your circumstances and explain your potential legal options during a free initial consultation. You are not obligated to hire us.
How is a Leased Vehicle Defined?
A leased vehicle is considered a long-term car rental. After the lease agreement has ended, you have the option to buy the vehicle. Otherwise, you return the vehicle to the leasing company.
When you lease a vehicle, you are not the owner of the vehicle. Monthly payments are made in exchange for using the vehicle for a certain time period. While the vehicle is in your possession, you would be responsible for paying for any maintenance and repairs needed on the vehicle.
Insurance Requirements for Leased Vehicles
Lability insurance coverage is required for leased vehicles. This coverage helps pay for medical expenses, damage to property, and other-related costs the at-fault driver causes to those injured, up to his or her policy limits. In Indiana, the minimum liability limits for drivers include:
- $25,000 for bodily injury or death per person
- $50,000 for bodily injury or death per accident
- $25,000 in property damage per accident
Most lease agreements may also require that drivers carry collision and comprehensive coverage. Collision coverage would help pay for damage done to a leased vehicle due to a crash with another vehicle or object. Comprehensive coverage would help pay for damage done to a leased vehicle not caused by a crash, such as theft, falling objects, or a natural disaster.
Are Vehicle Repairs Covered in an Accident?
Vehicle repairs may be covered based on the form of insurance coverage you have. This is why it is important to review your lease agreement in detail. If the other driver was at fault for the crash, you may be eligible to make a claim against him or her to get compensated for your damages.
Generally, the insurance company for the at-fault driver would send an insurance adjuster to inspect your vehicle. He or she may request that you take the vehicle to a repair shop to get an estimate or instruct you to bring the vehicle to a particular location for inspection.
The insurance adjuster would then determine how much the insurance company is willing to pay for vehicle damage. Some insurance companies may try to have you use one of their repair shops or get used parts to repair the vehicle.
Be sure to check your lease agreement for specific requirements regarding to the type of vehicle repairs that can be done. You may be limited to obtain repairs at certain body shops.
What Happens When the Leased Vehicle is Totaled?
The body shop will look at the damages done to the vehicle. If the cost to repair the leased vehicle is greater than the value of the vehicle, the insurance company may deem the vehicle a total loss. In these situations, the insurance company would pay for the current, actual value of the vehicle.
There may, however, be a difference between the current value of the vehicle and what is still owed on the lease. You would still be responsible for the remaining payments to the leasing company.
For instance, say the totaled vehicle is valued at $28,000 but you still owe $32,000 under the lease. The leasing company expects you to pay the full amount. You would need to pay $4,000 on your own.
You should also check to see if you have gap insurance. This is an optional, add-on insurance coverage in Indiana that could help cover the difference in damages that the insurance company is unable to cover. Some leasing companies may require that you have gap insurance.
How a Lawyer May Be Able to Assist
If you are unsure about what to do after an accident in a leased vehicle, our lawyers at Pfeifer, Morgan & Stesiak are prepared to assist. We know what it takes to satisfy the terms of a lease agreement and maximize the amount of compensation that can be pursued in a claim.
Contact us today to learn more about your rights. A consultation with us is free and we charge no fees for our legal services unless we are able to obtain compensation on your behalf.
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