What Happens If A Leased Car Is Totaled In A New York City Car Accident?

Many individuals opt to lease rather than purchase their vehicles. There are a number of benefits to leasing a vehicle. However, what happens if a leased car is totaled in an accident in New York City if you do not own it?

How Do Leased Cars Work?

Leasing a vehicle is comparable to renting one. However, the lease term is significantly longer. The typical duration of a lease is 36 months.

At the conclusion of your lease, you have the option of purchasing the leased vehicle or returning it to the leasing company. Many individuals return their leased vehicle and lease another. One of the advantages of car leasing is that you always drive a brand-new model.

However, the terms of your lease stipulate that you must return the vehicle in good condition. The leasing company will charge you for any vehicle damage.

Then, what occurs if the vehicle is totaled? Who is liable for the damages?

Leased Vehicles Must Meet New York Auto Insurance Requirements 

Even though you do not own the leased vehicle, you must comply with New York’s auto insurance requirements. You are responsible for paying the vehicle’s insurance premiums. New York’s minimum auto insurance requirements are as follows:

Personal Injury Protection (PIP) coverage must be a minimum of $50,000 per person for all drivers. No-fault insurance provides benefits regardless of who is at fault in an automobile accident. However, it does not cover vehicle property damage.

The minimum amount of bodily injury liability insurance required of drivers. You must have $25,000 for one person’s injury and $50,000 for one person’s death (the amounts double if two or more people are injured or killed).

Additionally, drivers must carry a minimum amount of property damage liability insurance. They must maintain a minimum of $10,000 per accident.

When you cause a car accident, liability insurance compensates the other driver and accident victims for damages. However, you are not compensated for any losses, including vehicle property damage.

New York also mandates uninsured motorist (UM) coverage for drivers. This type of auto insurance protects you against bodily injury in the event that an uninsured or hit-and-run driver causes an accident. However, it does not cover damage to your vehicle’s property.

New York does not mandate that motorists carry collision or comprehensive insurance. However, this type of insurance is required by the leasing company. If you cause a traffic accident or another event that damages the vehicle, the insurance will pay for the repairs (i.e., fire, theft, hail, storm, etc.).

Nonetheless, it is essential that you comprehend your insurance coverage and the “gap” between your coverage and the vehicle’s fair market value. If your collision and comprehensive coverages are insufficient to cover the total value of the leased vehicle, you may want to consider purchasing gap insurance.

Gap insurance covers the difference between your standard insurance coverage and the vehicle’s market value in the event of a total loss. It prevents you from paying out-of-pocket if the leased vehicle is totaled and its value is not covered by insurance.

Who Is Responsible for the Lease Payments?

You signed the lease, so the leasing company expects you to make the remaining payments. This is true even if the vehicle is a total loss. If the accident was your fault, your collision coverage may cover any remaining lease payments.

However, collision insurance may not cover the cost of a totaled leased vehicle. When leasing a vehicle, it is important to consider gap insurance.

If the accident was caused by the other driver, you may be able to sue for damages. Keep in mind, however, that any funds you recover for property damage will be paid to your insurance company as a subrogation claim. To keep the money for property damage would be to profit from the accident rather than be made whole, which is the purpose of tort laws.

What Should I Do After a Car Accident in a Leased Vehicle?

Ideally, you should have reviewed your lease agreement and insurance coverage prior to signing the lease to ensure that you have adequate insurance coverage to pay off the lease and the value of the vehicle. To confirm what you believed to be true, you must perform this action once more.

Always contact the police and seek medical attention after a car accident. You wish to preserve your right to recover compensation under your PIP coverage and possibly from the driver at fault. You must also immediately notify the leasing company and your insurance provider.

Since the leasing company is the vehicle’s owner, it determines how the vehicle is repaired. You should participate in the process to ensure that the repairs are performed properly. The company may attempt to charge you for damages at the end of your lease if it claims that the repairs were inadequate.

Contacting a car accident attorney as soon as possible can be useful. The attorney examines your rental agreement, insurance coverage, and accident-related information. The attorney describes your responsibilities and rights in regards to your leased vehicle and personal injury damages.

Contact Our Personal Injury Law Firm

Contact Abrams Law Group for a free consultation if you’ve been hurt in an accident and require legal assistance.

Abrams Law Group
104-70 Queens Boulevard, Suite 502
Forest Hills, NY 11375
(718) 997-9797

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