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Understanding Your Leased Car Agreement

When you crash a leased car, the original terms of your lease agreement remain the same. This means you’re responsible for the value of the vehicle. It may sound daunting, but it’s a standard part of leasing agreements.

Typically, when you lease a vehicle, you must have comprehensive insurance coverage. In the event of an accident, your insurance company will step in to cover the damages, subject to the terms of your policy. This can significantly alleviate your financial burden and provide a much-needed safety net.

Here are some of the key elements of standard lease contracts:

  • Insurance Requirements: While the specifics vary, all lease agreements require you to carry auto insurance. This typically includes both collision and comprehensive coverage. These coverages protect you and the leasing company from financial loss if you get into an accident or your vehicle is damaged.
    • Collision Coverage covers damage to the leased vehicle resulting from a collision, regardless of who is at fault. This money helps repair or replace the car when it’s damaged in an accident.
    • Comprehensive Coverage covers damages to the leased vehicle from non-collision incidents, such as theft, vandalism, or natural disasters.
  • Damage Clauses: Your lease will have specific clauses that outline what constitutes acceptable ‘wear and tear’ and what is considered excessive damage. If an accident happens, these clauses help determine your financial responsibilities for repairing damages that go beyond normal usage.
  • Lessee Responsibilities: As the lessee, you’re responsible for keeping the car in good condition. This includes addressing any damages from accidents. Your lease agreement will specify how and when repairs should be made and whether they need to be carried out by certified professionals.

After an accident, your insurance will be the primary resource for covering the costs of repairs and preserving your financial health.

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Steps to Take After a Car Accident in a Leased Vehicle

It’s crucial to take the right steps after a car crash to ensure the well-being of everyone involved, guarantee that you fulfill your lease obligations, and protect your path to compensation if you choose to file a suit.

Your safety and health are top priorities after a car accident. Immediately after your crash, make sure that you and any passengers are safe. If anyone is injured, call for medical help immediately. If possible, move to a safe location to avoid any further accidents.

Even if you feel fine, some injuries, like whiplash, may not be immediately apparent. It’s always wise to get a medical check-up following an accident.

In Arkansas, you’re legally required to report car accidents, especially if they involve injuries or significant property damage. Regardless of the accident’s severity, you will want to get an official record of what happened by reporting the accident immediately.

The police report captures an impartial account of what happened, which is invaluable for insurance and legal purposes.

Good documentation can significantly impact your case and your ability to collect compensation. If you can, gather as much evidence as possible at the accident scene.

  • Take Photos: Capture multiple angles of the accident scene, including damage to all vehicles involved.
  • Gather Information: Exchange contact and insurance information with the other driver(s). Also, note down the names, contact info, and testimony of any witnesses.
  • Record Details: Jot down the time, location, and weather conditions. Every bit of information can help in your insurance claim or any legal proceedings.

Check your lease agreement for specific instructions on reporting accidents. Your leasing company will guide you through the next steps, including where to tow the car if it’s not drivable. The leasing company will explain your responsibilities regarding repairs, insurance claims, and potential costs.

Reporting the accident to your leasing company is not just a contractual obligation; it’s also an opportunity to receive guidance on handling the situation according to your lease terms.

Costs of a Leased Car Accident

From repair costs to potential penalties, a leased car accident can still cost you quite a bit of money. Any damage from the accident needs to be properly repaired. Depending on the lease agreement, you may be required to use specific repair shops or parts, which can influence the cost.

In addition to repair costs, you should also be aware of potential penalties. Many lease agreements include terms related to vehicle condition and mileage. If the car accident results in damage that can’t be fully repaired, you might face penalties for returning the car in less-than-expected condition. Similarly, if the car is in the shop for repairs and you need a rental vehicle, this could lead to exceeding the mileage limit specified in your lease, resulting in extra charges.

Repair Costs and Insurance Deductibles

When your leased car needs repairs after an accident, the costs are typically handled through your insurance policy. Still, there are certain costs you should be familiar with:

  • Insurance Deductible: This is the amount you pay out of pocket before your insurance coverage kicks in. Depending on your policy, this can range from several hundred dollars to several thousand.
  • Lease-End Fees for Excessive Wear and Tear: If the damage to the vehicle is considered beyond normal wear and tear, you might face additional fees when you return the car at the end of the lease. Your car accident attorney can help you understand how your lease agreement defines ‘normal’ versus ‘excessive’ wear and tear.

How Gap Insurance Can Help

Gap insurance is an additional coverage that can be incredibly beneficial after a leased car accident. This insurance covers the ‘gap’ between the car’s current market value and the remaining balance on your lease if the car is declared a total loss. Cars depreciate rapidly, and this depreciation can create a significant gap.

For example, if your leased car is totaled and the current value of the car is less than what you still owe on the lease, gap insurance covers this difference. Without gap insurance, you would be financially responsible for this amount, which could be thousands (or tens of thousands) of dollars.

Having gap insurance can provide peace of mind and financial protection, especially given the depreciation rates of new vehicles. It ensures that in the worst-case scenario of a total loss, you’re not left paying out of pocket for a vehicle you can no longer use.

Who Is at Fault After a Leased Car Accident?

Fault plays a key role in insurance claims and legal cases. In Arkansas, like in many states, determining fault in a car accident is based on the principle of negligence. This means the person found to be at fault for causing the accident is also responsible for the damages.

Arkansas follows a “modified comparative fault” rule, which allows you to recover damages if you are found to be less than 50% at fault. However, your compensation will be reduced by your percentage of fault.

As a lessee, if you caused the accident, you may be responsible for the damage to your leased vehicle and any other property or medical expenses resulting from the accident. If you believe that you caused the accident — or you aren’t sure — it’s important to contact an experienced Arkansas car accident lawyer immediately. Your attorney can help guide you through the legal process and protect your path to compensation.

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Lease Termination and Damage Penalties

If you’re in a situation where you need to return a leased car post-accident, you may face penalties such as lease termination and the associated fees.

Returning a Leased Car Post-Accident

When returning a leased car after it has been involved in an accident, you are expected to repair any damages beforehand. The leasing company will specify the standards for these vehicle repairs, often requiring that certified professionals do them.

In some cases, if the car is severely damaged, the leasing company might terminate the lease early. This usually involves specific penalties or fees, as your lease agreement outlines.

Wear and Tear Evaluations

Upon return, your leased car will undergo a wear and tear evaluation. The leasing company will assess the car based on their specific wear and tear guidelines, and you may be responsible for additional fees if damages are beyond normal wear and tear. These costs compensate the leasing company for the diminished value of the car due to the accident-related damages.

Most leasing companies have a dispute resolution process if you disagree with the wear and tear assessment. You should document the vehicle’s condition thoroughly before returning it so that you have evidence in case a dispute arises.

Remember, each leasing company has its own policies, so review your specific lease agreement to ensure that you meet all requirements and understand your financial responsibilities.

Rainwater, Holt & Sexton: Your Advocate After a Car Accident

We recognize the stress and anxiety that come with being involved in a leased car accident. Our team approaches each case with sensitivity and understanding, ensuring our clients feel supported every step of the way. We’ll help you handle the deadlines, paperwork, and negotiations so that you can focus on what matters most: putting your life back together after an accident.

This is our home, and we want to ensure our neighbors and friends are supported. With nine offices in Arkansas and Tennessee – Little Rock, Little Rock-Corporate Hill, Springdale, Conway, Hot Springs, Bryant, Jacksonville, Jonesboro, and Memphis—our car accident lawyers are easily accessible when you need help.

Call us today at (800) 434-4800 for a free consultation!

Tell Us How We Can Help

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