What Happens if You Total A Leased Car

If you've just been in an accident where:

  • ... you or someone other than yourself has been injured.
  • damage has been caused to another vehicle or someone else's property.
  • … an animal has been injured or killed

Here's what to do right now:

  • Stop the car and remain at the scene.
  • Turn your hazard lights on and turn off the engine.
  • Assess the scene of the accident
  • If anyone has been seriously injured call the emergency services (999 if an emergency).
  • If no one is hurt but there are vehicles blocking the road call the police (101 for non- emergency).
  • Call your insurance company.
  • Give your details including vehicle registration number, name and address to anyone with reasonable grounds for asking.
  • Collect information for insurance purposes and note down the time of the accident.

if you've been in an accident collect information

What to do if you’ve been in an accident with your lease car

If you've been in an accident with your leased car, you need to inform your insurance provider and your leasing company (dealership) within a reasonable timeframe.

Your insurance policy will likely have a clause stating that you are obligated to report any accidents within a reasonable time - even if you are not claiming any insurance payout.

So, regardless of whether you're planning to claim anything from your insurance or if your vehicle just needs a quick trip to the body shop, you need to inform your insurance company as failure to do so can end up invalidating your insurance coverage.

Quick note: if you're only informing your insurance company but not claiming, be sure to make it crystal clear that you're telling them for 'information only' and that you do not wish to make an insurance claim.

When leasing, all negotiations with ordinary or GAP insurance providers, finance companies, or any other shortfall coverage is your responsibility as you are the caretaker of the vehicle.

After notifying your insurance company and leasing broker, you should take the car to a garage or body shop where they'll be able to advise on whether the car is worth repairing in the first place, and if so, give you a quote for any repairs that they would recommend.

What happens if the lease car can be repaired

First up, you need to double-check with your leasing provider and your insurance company if you are allowed to shop around for repair quotes or if you have to stick to a list of qualified garages. Some lease contracts state that you have to get all your maintenance and repair work done at your car manufacturer’s garage.

If you are allowed to use whichever garage you'd like, it can be a good idea to shop around as the prices may vary a lot - especially if you are not planning on making an insurance claim but paying for the repairs yourself.

If making an insurance claim for the repairs, your insurance provider will estimate what they think it will cost to repair the damages and sometimes provide you with a list of garages to choose from.

The mechanics at the garage or body shop will be able to give you a final quote for what it will cost to repair the vehicle.

To be able to make a claim on your insurance, you need to gather all your documentation and provide details of the accident - hence why this is essential to note on the day of the accident.

Should I make an insurance claim?

There are a few reasons why you might not want to claim anything for your car accident and for taking it to the repair shop.

If you have an excess on your car insurance, you might want to consider to what extent the excess outweighs the cost of small repairs vs the future value of your no-claims bonus.

For example, let's say your car insurance has an excess of £500 for any insurance payout.

You've been in a minor car accident and you've caused damage to your lease car. You need a new wing mirror, a few bumps straightened out and a dab of paint.

After paying a visit to your local garage, they give you a quote for £850.

Now, if you claim this repair with your insurance, you'll still need to fork out the £500 excess and then the insurance will cover the remaining £350. In the short run, that might seem like a sweet enough deal and if you've not got any emergency savings set aside for such unplanned expenses - you could easily be tempted to claim for the remaining £350.

But not so fast!

Let's explore what happens when you claim vs. when you don't claim for minor accident repairs.

should you make an insurance claim young man weighing up options

A no-claims discount can be as much as 80% off, meaning that the insurance premium you pay now - can jump significantly once you make a claim.

Say you're leasing a Volkswagen Up and your yearly premium after no-claims (40%) is £600. This averages out at £50 per month.

Have a look at the table below, this shows how much your future premium and monthly payments will be if you claim the cost with your insurer vs if you don't:

As you'll see, with your 40% no-claims discount out of the picture, you're looking at an annual fee of £1000 as opposed to your current £600. In other words, already in year one will you be paying more (£400) for your insurance premium than you would for paying the £350 upfront.

What happens if the lease car is totalled?

If the garage inspecting your vehicle determines that your lease car is a write-off, meaning it would cost more than 65% of the car's value to repair the damages, your auto insurance may declare that your leased vehicle is a total loss.

What normally happens is your car insurance company will pay for the current value of the vehicle.

However, when leasing a car (or when buying on finance) there is often a gap in between the current value of the vehicle and the owed sum in your lease agreement.

Picture this, a year and a half ago you got yourself a set of new wheels. You leased a fresh-out-the-factory, Volvo XC40, new price £36,800.

One year and one month in, you're driving to work on a cold morning and you underestimate the black ice. You slide right off the road and into a concrete wall. You hit the wall with a bang! Airbags go off. You're OK. The wall you've bumped is OK. The Volvo is not OK.

The market value for last years Volvo XC40, however, is now £28,900. This value of the car, right now, is the value your main insurer will pay. This leaves you with a shortfall of £7,900.

If you have gap insurance or some other shortfall cover, then they will cover this gap between the current market value and the new car price. If you do not, you might need to dig into your savings or find some other way to come up with the outstanding amount.

Not to mention, if you need a new car, you'll need to take out a lease agreement for a new vehicle and start the whole thing over again, initial rental and all.

icy conditions leased car off road

How to pay off your car lease after a write-off

If your vehicle has been written off, you might find yourself having to make a substantial down payment - especially if you've not arranged for any gap coverage. Here are a few things to check before you get on the phone with your leasing company:

  • Have a proper look in your main insurance documents. Sometimes, shortfall insurance is included in the main package.
  • Review your leasing contract properly. Some lease contracts have a waiver clause if your car is totalled and will let you off the hook for paying out the remaining lease term.

If you're not quite as lucky, be upfront with your leasing company and work together to find a solution to the problem.

The leasing company might be willing to work out a payment plan to get you to the end of the lease, consolidate your balance into a lease on a new car or settle for a reduced price.