Taking on a car lease in Australia comes with plenty of flexibility and benefits. Instead of spending years paying down a car loan, you could lease a brand new vehicle every couple of years. However, since you don’t own the car outright, what happens if you total a leased car in Australia?
In the first place, what's a totaled car? No worries, I'll walk you through and clear your confusion.
Totaled Car, Meaning
If a vehicle had been in an accident and was extensively damaged that repairing it would cost more than what it is worth is called a totaled car or a total loss car.
That's a major headache, and if the car you wrecked is a leased car, you’re still be responsible for making regular payments as per the lease agreement.
That’s why it’s critical to be aware of your car lease protection insurance options, which can help you prevent a massive financial problem in such a case.
In the following sections, we will look at what to do with a totaled car that you've been leasing.
Even though you don't own the vehicle in question, you'll see that there are many similarities in how you should respond if you were to ever get into an accident.
Let’s take a closer look.
What Should I Do If My Leased Car Gets into an Accident?
Here’s the most important truth about driving a leased car in Australia: even though you don’t own it, you’re responsible for that vehicle nonetheless. That’s why you’ll find that the way you react to an accident in a leased car is pretty much the same as if you owned the car 100%.
Here are the steps you should take if you get into an accident with a leased car.
Step 1: Stop the Car Immediately
Stop the vehicle and switch on your hazard lights. Assess your situation. See if anyone is injured; if such is the case, call 000 or 112 for an ambulance and emergency assistance.
If the vehicles involved can move after a minor crash, the drivers should always pull over to the safe side of the road. Whatever discussions you need to have can wait until everyone is out of harm’s way.
If one or both vehicles can’t be moved, turn on the hazard lights and wait someplace safe for the emergency response team or police to arrive.
There's a golden rule when it comes to car accidents: never admit fault or take responsibility. At this point, it may or may not be your fault, but that's not for you to determine. Plus, some drivers feel an overpowering sense of guilt and end up apologising first, even if it wasn't their fault.
Legally speaking, that’s not a good idea. The insurers and authorities will decide who’s at fault, so you and the other driver don’t need to worry about that just yet.
Step 2: Exchange Information and Gather Evidence
As usual, exchange information with the other driver. Then, gather evidence by snapping photos of the damage for your personal records.
Step 3: Notify Your Auto Insurance Provider
Next, you should immediately notify your auto insurance provider that you've been in an accident. Do not wait! It would be best if you were doing this while you're still at the scene.
Typically, insurance companies have an accident hotline that you can call for this purpose. They’ll advise you what to do next.
Depending on your insurance policy, they might send a tow truck to get your car and bring it over to an approved workshop.
What about the Car Leasing Company?
Depending on how the leasing agreement and insurance policy are structured, you may also need to notify the leasing company that you've been in an accident.
In some cases, the leasing company might also be listed on the insurance policy as an 'Interested Party' and thus will be notified directly by the insurer.
Step 4: Get Your Car to an Approved Workshop for Inspection
Once your car has reached the workshop, the mechanics and technicians will inspect your vehicle to determine the extent of the damage. Suppose the car is beyond repair (according to the insurance company's policy). In that case, they'll write it off as a total loss car.
Here’s the thing about that: even though the insurance company might consider it a total loss car, you’re still able to dispute that if you believe that it’s still fixable. Read this article on total car settlement to find out more about that particular issue.
If your car is still repairable, the insurance company will pay to have your vehicle fixed, according to whatever your insurance policy provides.
What Happens to My Lease If an Accident Totaled My Car?
There is one significant downside when you wreck a leased car. Remember what I said in the introduction to this article? No matter what happens, you're still responsible for the vehicle and its lease.
So, if an accident totaled the vehicle, you're still responsible for making your regular lease payments as usual. As a matter of fact, even if the car weren't a wreck but took months to fix, you'd still have to make those payments as scheduled.
The bottom line? You signed the lease agreement, so you’ll have to abide by it. That might sound terrible, but there is a silver lining: car lease insurance.
What Is Car Lease Insurance?
Besides the standard car insurance coverage, you may also want to know about car lease protection insurance. That's a specialised insurance product that protects you from the unique risks that you'll face when driving a leased car, such as the possibility that you might wreck a leased car in an accident.
To put it simply, car lease protection insurance can help you pay off your car lease if you were to die, lose your job, or even if you were to wreck the car in an accident.
That kind of insurance might not seem necessary if you’re a first-timer, but it would be a very smart thing to do on your part. With it, you can sleep easy knowing that no matter what happens to you or your finances, that car’s lease will be paid one way or another.
Depending on the specific options you choose, that car lease insurance policy can also offer you many other valuable benefits. For example, if the vehicle has to sit in a workshop to get fixed up, the policy might pay for a rental car in the meantime.
Do You Want to Know More about Car Leases and Auto Insurances?
To better understand a car lease, vehicle insurance, or any other topic related to the automotive world, we invite you to explore what Carpart.com.au can offer! Interested in finding a totaled car for sale? Check out the directory or our recommended wreckers!
We've got a blog section for more articles like this one, a Car Part finder for locating auto parts sellers and car wreckers, an Automotive Directory for finding the nearest mechanic or auto technician, and more!
It’s a treasure trove of helpful information, so don’t waste any more time, check out our website!
By Ray Hasbollah