A lease allows you to drive a car at a lower monthly payment than if you purchased the car. A lease is a short-term agreement of a few years, which allows you to trade in for a newer car every few years. When you lease a car, you agree to return it in good condition at the end of the lease. If you damage the car, you will be charged additional fees.
File With Insurance
After the accident, file with your insurance company and the insurance company of the other driver if he was at fault. The insurance company will determine if the car is totaled or if it can be repaired. If the car is totaled, the insurance company will issue a check to the lienholder of the car to pay for the replacement of the car. According to the terms of the lease, you may owe more money on the lease than the insurance company will pay for the replacement of the car. If you did not meet these requirements, you will be held responsible for the entire amount of the remainder of the lease as well as the fees associated with breaking the lease early.
Gap Insurance
Gap insurance will pay the difference between what your traditional insurance policy will pay for the car, and what it will cost you to pay off the remainder of the lease. Some leasing contracts require you to purchase gap insurance in addition to your traditional car insurance. If your company does not require this, you will be held responsible for coming up with the additional money to settle the lease with your current company.
Clear Up the Lease
It may take a few months for the insurance company to process the claim. It is your responsibility to keep your lease current until the insurance company has paid it off. You are responsible for any monthly lease payments until the matter has been completely settled, even if you no longer have a car to drive. If there is any remaining balance left after the insurance has paid out the settlement, you will need to find a way to cover the rest.
Purchase or Lease a New Car
Since your car was totaled, you will need to find a new car to purchase or lease. When looking for a car, find one that has affordable car payments. If you decide to lease again, make sure your insurance will cover the replacement of the car if it were to be totaled or stolen. Additionally, purchase the gap insurance so you will not need to come up with extra money to settle the lease.
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