It is common for drivers involved in an automobile accident in California to not own the vehicles they are driving. Many drivers operate leased vehicles. If a leased car is totaled, or deemed a total loss due to extensive damage caused by a car accident, the case will most likely involve Guaranteed Asset Protection (GAP) insurance coverage.
Who Pays for an Accident in a Leased Car in California?
Under California’s “at-fault” insurance rule, if another driver or party is responsible for causing your car accident in a leased vehicle, they will be responsible for paying for your losses. This includes covering the costs of car repairs or providing you with compensation for the pre-crash value of a totaled vehicle.
The Challenges of a Car Accident Case Involving a Leased Car
When you take out a lease on a new motor vehicle, the leasing agreement will most likely make you responsible for a higher amount of money than the vehicle is actually worth. The second you drive the car off the lot, it will depreciate in actual market value. However, you will still be on the hook for the full amount of the vehicle, as stated on the lease.
If a car accident results in the leased vehicle being totaled, meaning the cost of repairs exceeds the value of the vehicle, you will be expected to pay the leasing company back for the full remaining value of the loan.
Unfortunately, an insurance company will only reimburse you for the actual pre-crash value of the vehicle – an amount that is likely less than the remaining amount you owe on the lease. GAP insurance can be useful for covering this gap.
What Happens If You Total a Leased Car in California?
What Is GAP Insurance?
Guaranteed Asset Protection insurance is a specific type of coverage that is often required by leasing companies before they will allow a driver to lease a vehicle. GAP insurance makes up for the difference in value between the amount remaining on a lease and the actual cash value of the leased and totaled vehicle.
If you still had $15,000 remaining on your lease agreement at the time of your serious auto accident, for example, but the other driver’s insurance only paid $10,000 for the car’s fair market value, you would personally be responsible for the remaining $5,000. GAP insurance can help you pay for this difference.
What to Do After an Accident in a Leased Vehicle in California
If you get involved in an accident in your leased car in California, take prompt action to protect yourself and preserve your rights. Start by pulling over in a safe location and checking for injuries. Call 911 to report the accident and request emergency services, if needed.
Document the scene as much as you can, including taking pictures and gathering eyewitness information. Ask the police for an official police report. Contact your own car insurance company to report the crash. Notify the leasing company, as well.
Review the terms of your lease agreement. This contract will outline your responsibilities if an accident results in damage to the vehicle. You may have to pay certain fees and penalties if the vehicle is totaled before the lease ends.
Depending on fault for the accident and the insurance available, you may be reimbursed for your financial losses. This could include compensation to allow you to pay off your remaining balance and end your lease agreement, as well as money to lease a new vehicle or purchase a car of your own.
If you need assistance with a leased car accident case in California, contact an experienced Sacramento accident lawyer at Jacoby & Meyers for a free consultation. We can help you navigate GAP insurance and a challenging claim using personalized legal services.