What Happens If You Total a Leased Car in Arizona?

Posted On January 13, 2024 Car Accidents,Personal Injury Written by John Allen Phebus

If you total a leased car in Arizona, the insurance process and financial outcome will depend on the terms of your lease agreement, your insurance coverage and the specific circumstances. You may or may not be responsible for paying for some or all of the repairs to the leased vehicle. It is important to know what steps to take to protect your legal rights and how to seek the financial compensation to which you may be entitled.

Who Pays for a Leased Car Accident?

Arizona is a fault state. This means that after a car accident, the driver or party at fault for causing the crash is liable (financially responsible) for related expenses, including property repairs. If someone else is at fault for the accident, his or her car insurance will be responsible for providing coverage for your leased vehicle. Every driver in Arizona is required to maintain minimum amounts of liability insurance to pay for at-fault car accidents.

If you were involved in an accident that totaled a leased car – meaning it is deemed a total loss by the insurance company, or the price to repair the vehicle exceeds the value of the car – you could be eligible for the full pre-crash value of the vehicle rather than reimbursement for the cost of repairs. If the other driver does not have enough insurance, your own insurance may be used to cover the remaining amount.

What Is Gap Insurance?

Gap insurance, also known as Guaranteed Asset Protection insurance, is an important type of insurance in a case involving a leased vehicle. Gap insurance is typically required if you are leasing a car. This type of insurance provides additional coverage to close the gap between what you still owe on the vehicle loan or lease agreement and what the car is worth in the event of a car accident.

An insurance company will only pay for the pre-crash value of a leased vehicle if it is totaled in an accident. This is most likely less than the amount remaining on your lease agreement since motor vehicles immediately lose value when they are driven off the lot. Gap insurance will help pay the difference between the actual cash value of the leased car and the amount still owed on the lease.

Lease Agreement Terms Can Vary

If you total a leased car in Arizona, notify the leasing company right away. Report the accident and provide them with the necessary information to file a claim. They may have specific procedures you need to follow to qualify for insurance coverage. Review the terms of your lease agreement to understand how the company handles accidents and insurance. This can help you understand your financial obligations in case of a total loss.

End-of-Lease Obligations

Most vehicle leasing agreements outline specific end-of-lease obligations. These may allow you to terminate the lease on the vehicle early without penalties. Alternatively, you may need to fulfill the remaining lease obligations to end the lease on the totaled car. This may include finishing your lease payments. With gap insurance, these payments can be made smaller; however, you may still be responsible for paying the difference.

Contact a Surprise Car Accident Attorney

Car accidents involving leased vehicles are more complicated than traditional car accident cases. You may need a car accident attorney in Surprise to help you review the terms of your leasing agreement, communicate with the leasing company on your behalf, file a claim, and negotiate with one or more insurance companies for fair compensation.

An attorney can inform you of your legal rights and guide you through various options that may be available to recover compensation for a total loss. Call the Law Offices of John Phebus at (623) 847-7117 for a free car accident case review to learn more.