Accident With A Leased Car? Follow These Steps ASAP

Car accidents are no joke. Every year, an average of 6 million car accidents are reported in the US, resulting in 3 million injuries. Some estimate that the average American driver will be involved in 4 accidents over the course of his or her life.

If you get into an accident while driving a leased car, maybe it seems like there will be some extra complications. After all, you don’t own the car!

The truth is that it’s not so different from what you would have to do for a car you own or are financing. There are just a few more papers to file and more people who may have a say in how you get the repairs done.

Here I’ll explain step by step what to do in case of an accident and how to deal with insurance on a leased car.

Insurance for a leased car: am I covered in case of anything?

In this article, I will assume that you have sufficient insurance, since this is typically required by leasing companies in order to get approved for a lease. Your insurance plan should meet both the requirements of state law and the terms of your lease contract.

It should also provide coverage in case you are at fault for causing an accident, or in the event that the other driver is unable to pay.

Finally, especially for a leased car, you should have gap insurance.

New lessees often wonder if they should purchase gap insurance, a type of insurance that helps in case a lease car is totaled in an accident. In my opinion, this is absolutely essential, and we’ll see why later. In fact, it’s so important that leasing companies often require customers to purchase it, or roll it into the leasing contract.

Be sure to clarify whether gap insurance is included or if you need to purchase it when you sign up for a new lease.

What to do after a car accident

Your first move after an accident should be to make sure that you are safe and uninjured. Take a few deep breaths and really check that everything works like it’s supposed to: with the shock of an accident, adrenaline can hide even serious injuries.

Next check on any other people involved, drivers and passengers.

If someone is hurt, call immediately for emergency medical assistance. Try to keep the injured person calm and do not move them until the paramedics get there.

The next important step is to call the police. They will make an accident report based on your account, witnesses and available evidence. This official documentation will be important for filing insurance claims, especially if there’s a dispute over who is at fault.

Determining fault is essential, since whoever is found at fault may be responsible for compensating the other driver for any losses, including auto repairs and medical bills.

Call the police even if it’s a minor accident. Maybe at the moment it seems like nothing is wrong, but if you discover damage later and want to file for insurance, you will need a police report.

You should also exchange contact information and insurance details with the other driver. You’ll need this info to make your insurance claim.

Now, notify both your insurance company and leasing company.

The insurance company will take care of filing claims against the other driver if they were at fault.

The lease company will want to know what happened to their vehicle and have a say in what happens next. They will also expect to hear from your insurance company, or that of the other driver.

After a car accident, there are two basic scenarios: either the car is damaged but can be repaired, or it’s damaged past repair and must be declared a total loss (“totaled”).

  • My lease car is damaged but repairable:

Once you’ve notified everyone you need to notify, take the car to a body shop and get a repair estimate. The shop that does this estimate – and the repair job – must be one that’s approved of by your insurance company and the dealership the car was leased from. (They can recommend one if needed.)

A lease car must be returned in pristine, saleable condition at the end of your lease period, so any damaged parts must be replaced by brand-new Original Equipment Manufacturer (OEM) parts: no cheap after-market pieces or old parts recycled from a junkyard.

The car will get a thorough check-up when you return it to the dealer, so don’t cut corners now.

Once you have that estimate, send it into the insurance company.

How much you will end up paying depends on your insurance policy, especially your deductible and insurance limit.

The deductible is the amount you pay before insurance steps in. This will be the same whether the repair cost is $500 or $5,000.

The insurance limit is the maximum amount that the insurance company will pay. Typically the higher the limit, the higher premium you will pay for insurance.

So let’s say your insurance policy has a $500 deductible and an $8,000 limit. Let’s also say your car needs $2,000 in repairs.

You will pay $500, and the insurance company will pay the remaining $1,500.

But now imagine that your car needs $10,000 worth of repairs. In this case, the insurance company will pay $7,500 (the limit minus your deductible) and you’ll be responsible for the rest.

  • My lease car is totaled:

If your car is damaged to a certain point, the insurance company might declare it a total loss. This means that the cost of repairs exceeds a certain percentage of the car’s value (usually about 70%).

The insurance company will then pay the market value of the car to the leasing company.

This is where drivers can get caught in a sticky situation, if it’s early in the lease and what they owe is more than the car’s current value. (Cars depreciate most sharply the minute they roll out of the dealer’s lot.)

For example, if you owe $20,000 in total for your car but the vehicle’s worth is determined by the insurance company at only $18,000, you will still owe $2,000 for a car you can’t drive anymore.

Gap insurance exists to get you into the clear in this situation. It can be a lifesaver, and for this reason, it’s often included in your monthly price. However, Toyota does not include Gap insurance. Therefore, you have the option to purchase it for approximately $200 through the lease cycle, which is roughly $5.55/month on a 36-month lease.


Getting involved in a car accident is never fun. Of course, the most important thing is always that you and the other people involved are safe. Cars can be fixed, money comes and goes but there’s no replacement for your body.

We can all try to prevent accidents by driving responsibly. Stay focused and alert on the road, respect speed limits, be aware of your surroundings and never drive under the influence of alcohol, drugs or cell phones!

Still, accidents happen even to the most careful, so it’s important to have complete insurance even if you think you’ll never need it. (Hint: no one ever thinks they’ll need it!)

If you do get involved in an accident with a leased car, just go step by step, make the reports as needed and follow the guidelines laid out by your insurance company and lease company. This will guarantee the cleanest, most hassle-free route back to driving as normal again.