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What Happens If You Total a Leased Car? [2024 Owner Options]


Leasing a car offers you a lot of benefits. It gets you behind the wheel of a brand new car at an affordable price, while also giving you the flexibility to upgrade to a fresh new vehicle after only two to three years.

If you relish the “new car” smell and despise having to take your car in for repairs and maintenance, a leased car may be a great option. So, what happens if you total a leased car?

While leasing a car has its perks, you still do not technically own the vehicle. Instead, you agree to a long-term rental from the dealership. And while nobody expects ever to cause catastrophic damage to their vehicle, it is important to prepare for the worst.

It’s good to plan ahead just if the unthinkable happens, and you have a serious accident that damages your leased car beyond repair.

You Are Responsible for All Leased Car Maintenance and Repairs

When you lease a car, part of the agreement is that you provide regular maintenance and upkeep. You are responsible for any needed repairs to the vehicle until the terms of the lease are up.

Whenever you have to return the car to the dealer company, you will be responsible for paying for all the vehicle’s needed work. Therefore, you should promptly tend to all of the maintenance and repairs your leased vehicle needs.

There is no reason to delay since driving an ailing car can result in further damage – and cost.

Regular Car Maintenance and Inspections

To keep your leased car in great shape and running smoothly, you need to take it in for regular maintenance. In fact, many lease agreements require you to bring in your vehicle for service at specified mile increments, usually every 5,000 to 7,500 miles.

During your scheduled car maintenance and inspections, mechanics will perform various services to keep your leased vehicle firing on all cylinders:

Change the Oil

Arguably the most crucial task of regular vehicle maintenance is an oil change. Most cars need to have their oil changed every 3,000 to 7,000 miles to ensure the vehicle is functioning properly.

Rotate Your Tires

Rotate your tires to ensure that all four tires have an equal amount of wear on them. We usually recommend you have your tires rotated every 3,000 to 5,000 miles.

Replace the Air Filter

The air filter in your vehicle can accumulate dust, debris, and other potentially hazardous material. When your leasing vehicle gets to approximately 15,000 miles, most mechanics suggest replacing the air filter.

Check the Battery

A car battery is always dying at an inopportune time. During routine maintenance, mechanics will check the automobile battery to make sure it has plenty of juice left.

Inspect the Brake Pads

Having fully operational brake pads can literally be the difference between life and death. During the inspection, a mechanic will check that your brake pads are not worn down and are still working properly.

Check All Fluid Levels

Your automobile has multiple liquids that eventually need to be replenished. This includes fluids for the windshield wiper, transmission, and power steering. During routine maintenance, all of these fluids’ levels will be checked and topped off when needed.

Where Do I Take My Leased Car for Repairs?

Since you are not the owner, the car dealer company gets some say into how and where you get any repairs done. Let’s say you end up in an accident.

Your dealership will request documentation regarding the accident so that they can independently appraise the damage. Then, they pick a repair shop they trust to perform all of the needed services. However, if the damage is beyond fixing, the repair shop will let you know that the car is totaled.

Is Your Leasing Vehicle a “Total Loss” or Totaled?

Huge accident that was a total lossIf the damage is extensive, often, the appraisal for the cost of repairs will exceed the actual cash value (ACV) of the vehicle. For example, let’s say you are two years into a lease and the ACV value of the vehicle is $18,000.

You get into an accident, take your vehicle to a repair shop, and they estimate that repairing the damage would cost $20,000. Since the cost of repairing all the damages is higher than the vehicle’s value, it is probably not worth it to invest all of that money into fixing it.

If that is the case, both your insurance company and the leasing company will label the car a “total loss.”

This is saying that it is not worth the effort to repair the automobile, and instead, you and your insurance are responsible for paying the vehicle’s ACV to the dealer company.

Insurance companies are usually very accurate with the ACV value. That is why we encourage our readers to choose the best insurance company possible.

Do You Have Gap Insurance?

Your lease agreement is based on the sticker price of the vehicle. In many cases, the vehicle’s actual cash value (ACV) is less than what you still owe under your lease agreement.

Here is where you may want to rely on gap insurance to cover the discrepancy between the ACV of your leased vehicle and the amount you still owe on your lease.

Many dealerships build gap insurance into their leasing agreements. Gap in insurance terms refers to the difference between the ACV value of the vehicle and the total amount owed to the leasing company.

For the most part, the insurance company will pay the vehicle’s ACV value, and the gap coverage provided by the leasing company will kick in and pay the remainder of your car totaled.

Understand the terms of your lease and ask the leasing company if you have gap coverage included. If your lease agreement does not have gap insurance, you are responsible for paying the gap out of pocket.

In some cases, this difference can be thousands of dollars! Protect yourself and your wallet by negotiating gap insurance into your car lease terms.

What If I Do Not Agree With the Actual Cash Value (ACV) Evaluation?

If you feel like the evaluation of your leased vehicle’s ACV is way too low, there are some steps to take to get a second opinion. You can appeal the ACV and ask for a second evaluation, with your rights protected under the Insurance Act.

By filing an appeal, there may be a change in the ACV in your vehicle, which hopefully can lower the gap between the ACV and the amount you owe on your lease.

You should negotiate with your insurance company. Make sure to provide your insurance provider with all information you have on the vehicle, including its maintenance history (or lack thereof), miles driven, and other pertinent details.

Do some research online and at other local dealerships to determine the average price for a similar make and model vehicle. Your best bet may be to contact a used car dealership and use their expertise to find a more accurate price point.

Once you have an idea of the market value, submit your appeal and new ACV to your insurance. Remember to be professional and courteous until both sides can agree on a fair price.

Do I Still Have to Make My Normal Lease Payments?

It will likely take some time for your insurance company to process your claim. Therefore, during the time between when the accident occurs and when the claim is settled, you still have to make your lease payments.

Just because your leased vehicle is no longer working properly and you cannot drive it, it does not mean that you are excused from your lease. You still need to make your regular payments until the claim is settled and you, your insurance, and the dealership decide on the appropriate next steps.

Can I Get Out of My Car Lease?

While there are several different ways you can get out of a vehicle lease, it is not an option if you totaled your vehicle. As stated above, you are responsible for all maintenance and repairs. You’ll probably not be able to get out of your lease without taking financial responsibility and fixing any damages to the car.


Insurance coverage plays a crucial role when leasing a vehicle. Make sure that you select a reliable insurance company for you to get the best ACV value of your automobile.

By using the proper insurance company, you will reduce your liability in case the insurance gap policy denies any payments. Stay safe an ensure you have your vehicle’s insurance gap coverage in case anything happens.

Last Updated on: February 21, 2024

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