What happens if I write off a lease car?

By Paul Edge
30-10-2020
What happens if I write off a lease car?
There’s no getting away from it – accidents happen. Sometimes they’re our fault; other times we’re just in the wrong place at the wrong time.
This is where insurance can prove a huge help. Once we’ve paid the excess, it can contribute towards the costs of repairs or even replacing the car. But what about a leased car?

Accidents in lease cars

Insurance is something you need to arrange yourself, unless you have a prior agreement with your leasing broker. If you’ve had an accident, you should tell your insurer as soon as possible, even if you don’t want to claim any money. Failure to do so could invalidate your insurance.
If the damage is small, you may want to consider funding the damage yourself. All insurance deals will come with an excess payment anyway, and you may have a no claims bonus you want to protect.

For more substantial damage, it’s best to ask your insurer. Some leasing providers will stipulate that you can only get the car repaired in certain garages, while some insurance providers may recommend certain companies. If you’ve got more freedom, it’s best to shop around.  
If the accident was your fault, take the hit, learn from it, and return the car in its original condition once your lease is up.

Writing off a leased car

This is where it becomes more complicated. If your car is written off, or even stolen, your insurance company should award a pay-out based on the value of the car. However, remember that this value factors in depreciation – so your insurer may value the car as less than your leasing agent, depending on how long you’ve had it.

Other factors will affect the estimated value, such as the mileage and model.
In these cases, you’re effectively ending the contract, so you’ll have to pay the rest of the payments. If the insurer doesn’t deem the car to be worth the remaining value of the payments, you may have to pay the difference.

Gap insurance

You can avoid paying the difference by taking out gap insurance when you insure your leased car. This provides extra assurance that you won’t have to pay anything beyond the excess should the worst happen.

What happens if you turn in a lease car with damage?

When your leasing contract is up, you should return the car in the same condition you found it. Of course, this isn’t totally draconian – lease cars are subject to the BVRLA ‘Fair Wear and Tear’ guidance, which may cover things like cosmetic damage and tyre wear relative to mileage.

If your leasing agent deems the car damaged beyond these guidelines, you may have to pay for any extra repairs. Again, you may be limited in the garages you can choose to make these fixes. For added reassurance, you can take out a maintenance package, which can cover:
•    Servicing
•    Tyre repairs
•    Other cosmetic damage.

If you’d like to know more about maintenance packages on our business and personal leasing deals, contact the Car Lease Agent team here.