What Happens If You Crash a Leased Car?

  • By Michael McKean
  • 9 min read

As we all know, being involved in a car accident is always stressful, no matter whether you own, hire or lease your car. But knowing what to do with your damaged leased car after it has been involved in an accident is far from obvious.

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Here's the thing, amigos.

Accidents happen, and especially car-related accidents. It's a fact of life.

Your odds of being involved in a traffic accident are roughly 88/1, and your odds of being involved in a serious traffic accident are roughly 606/1. Those figures might not seem overly high, but they're not so low as not to be worth worrying about. Out on the roads, anything can happen.

As we all know, being involved in a car accident is always stressful, no matter whether you own, hire or lease your car. But knowing what to do with your damaged leased car after it has been involved in an accident is far from obvious. There's the matter of insurance, then how the crash affects your lease, and then the steps to take with your lease provider. It can be a lot to think about . . .

But as luck has it, your friendly neighbourhood vehicle leasing experts here at LeaseLoco are on the scene to fill you in with all the details. Yep, right here in this guide.

So buckle your seatbelts and let's get going.

What to Do at the Scene of the Accident

Same as you would do with any other accident, whether you're on a car lease deal or not.

You stop at the scene, turn your engine off and switch on the hazard warning lights, then exchange details with the other motorist(s). Call the emergency services if anyone has been injured or if there are vehicles blocking the road.

For insurance purposes, it's important to exchange insurance details and gather as much information as possible, so:

  • Note the address and location of the incident and at what time it took place
  • Note the details of every vehicle involved, including model, colour, and vehicle registration number
  • Note the contact details of the other drivers involved and any pedestrians who were witnesses to the incident
  • Photograph any injuries and any damage to vehicles and property

Then . . .

  • As already discussed, call your insurance company as soon as possible
  • Give them your details (including registration number, name and address), and recite the information above that you've just collected

Important fact: under the Road Traffic Act 1988 section 170, it's actually an offence to fail to stop at the scene of an accident or to fail to report an accident in which you're involved. (And even if you aren't directly involved but your presence was a factor in the incident, it's advisable to stop and remain at the scene for a reasonable length of time.)

If for some reason you aren't able to exchange details with the other driver at the scene, you'll have to report the accident at a police station or to a police constable within 24 hours. And it is compulsory to provide your insurance certificate if another person is injured. Failure to comply with these obligations is an offence under the title 'Failing to stop' and 'Failing to report'. The penalty for it includes a maximum £5,000 fine and 5 to 10 points on your license, not to mention the possibility of a driving disqualification and six months' imprisonment.


Telling Your Insurer

Even if you are not making a claim yourself, it's vitally important that you report the accident to your insurance company as soon as possible. Failure to do so could invalidate your cover, and chances are that your insurance policy will have a clause in it saying that you need to take this step.

However, in the event that you're paying for repairs yourself in order to preserve your no claims discount, you don't have to submit a claim. The cost of losing your no claims bonus may end up being more than the cost of paying for the repairs yourself.

You will still need to tell your insurance company that you've been involved in an accident. You should supply this information in a letter, telling your insurer what happened, that it is for 'information only' and that you don't want to make a claim.

What Will Happen to my Insurance if my Lease Car is in an Accident?

Unless you cancel the insurance policy, you'll have to keep making the monthly payments if you've been paying monthly up until this point. The majority of insurance companies let you continue on their policy for 2-3 weeks until you set yourself up with a replacement car. Once you've gotten that replacement, you can set up a new policy. However, if you don't plan on getting a replacement car, you're free to go ahead and cancel your policy.

If your car is a total loss, then you've still got options. If the car is less than 12 months old at the time of the accident, some insurance companies will offer what's called 'New Car Replacement' whereby they will provide you with an identical car. But because you're leasing and you don't own the car, whether you get this or not is entirely up to the finance house. After all, they are the ones who own the car. It's an option that makes great financial sense, but you might be in for a long wait, as you could end up waiting 2-3 months for a replacement car!

What Happens if the Lease Car Can be Repaired?

Contact your leasing company to check if they can offer you any repairs and at what value. They might only permit you to stick to a list of qualified garages specified by them, but if not, then be sure to shop around as prices can differ across the full range of garages.

The garage mechanics will be able to offer you a final quote for the cost to repair the lease vehicle.

In order to make a claim on your car insurance with your insurance company, you need to have gathered all your documents along with information of the traffic accident. That's why it's so important to stop at the scene and write down or record all of those details we mentioned earlier.

What Happens if you Total a Leased Car?

When the vehicle is a total loss, it should be possible that your insurance company pays up and reimburses you for its current worth. You’ll end the lease when the current value of the vehicle equals the remaining balance of the lease, and you break even. 

However, you will most likely still owe the leasing company money up to the full value of the vehicle.

That's where gap insurance comes in. Check your policy to see whether it's included. Usually GAP insurance is pretty cheap and is almost always worth having. This is the same if you write off a car that's financed with PCP too.

What Happens if the Lease Car is Written Off?

The finance house will treat it as if you've bought the car, and therefore end the agreement.

So you will need to get a new contract and go through the whole process again.

But as you still have finance to pay, they will decide on a settlement figure for you to pay. The car insurance company will then pay out how much the car is worth at the time of the accident. Hopefully that's enough to cover the settlement figure. If not, you'll have to pay that yourself, unless you've got Gap insurance. Gap insurance will cover that cost, whereas if you didn't have Gap insurance, you'd have to find the money yourself. This is the same if you write off a car that's financed with PCP too.

Who is Responsible for Repairs on Leased Cars after an Accident

If another driver caused the accident then you have a right to compensation for any losses as that driver's insurance company should be liable. That includes compensation for any physical injuries suffered by yourself and/or damage to your leased car. If your vehicle is totalled, then they will pay up to the vehicle's market value at the time of the accident.

As is the case with any other automobile accident where the other motorist is the one at fault, the payment will be sent directly to the leasing company and any additional losses reimbursed to you.

But what if the other driver's insurance company denies liability on behalf of them? Well, in that instance you may need to contact your own insurer to negotiate repairs covered by your policy.

What Kind of Damage is Acceptable on a Lease Car?

Obviously, major damage is a big no-no, but that begs the question: what amount of damage IS acceptable on a lease car? After all, throughout the course of your agreement, your car is bound to pick up some wear and tear from the effects of weather and simply being driven, and any leasing company worth the name knows this. This is why they don't charge you for what's known as fair wear and tear, which includes:

  • Regular tyre wear
  • Typical brake wear
  • Removable stains in the interior
  • Minor scratches and dinks on your lease car

Exactly what's deemed acceptable may differ from leasing company to leasing company, so be sure to check over your contract. In general though, you should be fine with the above.

Turning in a Leased Car with Damage

It's a mistaken belief that your leasing company simply forgives any damage as long as you take out a new leased car with them. No matter what your dealership tells you, someone is going to be responsible for paying up for the damages, and you can bet your two front wheels that it's not going to be them! Even if you go on to take out another car with that dealership, the damage won't be forgiven.

And even if you don't end up paying in cash, the leasing company will transfer the cost of the damages from your previous vehicle onto your new one. That being the case, you will essentially be paying them for the duration of the new lease, as well as paying interest on top of that.

Summing Up

Well, that about covers it, amigos.

Being involved in a car accident is terrible. We all know that. And as you've no doubt learned, dealing with a damaged lease car can certainly make things more than complicated.

But hopefully you've also seen that it's far from the end of the world. So long as you take the right steps and follow the proper procedures following a car accident, you can be sorted and back on the road in no time, and ideally without having to pay up anything extortionate.

Best way of avoiding the above, though . . . don't become involved in any car accidents. (And just hope that nobody else crashes into you!)

Leasing With LeaseLoco 

LeaseLoco makes it super quick and easy to search through the hottest car and van leasing deals on the market. We want to give you every confidence that you are working with the very best brokers and car dealers, which is why all of our leasing partners have signed our Ethical Code of Conduct and why we have the highest advertiser partner criteria in the industry.

Plus, all of our available deals on a lease agreement include . . .

  • FREE delivery to your door (mainland UK)
  • Manufacturer's warranty
  • Breakdown cover
  • Road tax

If you’ve read the benefits of car leasing here in this guide and think that leasing a car is the best option for you then why not check out the hottest lease deals available to find one that suits you best?

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