What Happens When You Wreck a Leased Car?

The terms of the lease agreement determine what happens in the event of an accident in a leased car. The terms of the lease agreement specify the amount of insurance coverage the company requires the driver to carry on the vehicle, according to AllAboutCarAccidents.com.

Mercedes-Benz Financial Services requires consumers who lease a vehicle through the company to report any accident to their insurance carriers as well as to the Client Service Center. The insurance company includes the finance company as a loss payee.

Generally, insurance carriers send checks for the repairs in the name of the insured as well as the finance company, which means that they require the signatures of both parties to pay for repairs. If the insurance payment does not cover all the cost of repairs due to deductibles, Mercedes-Benz Financial Services explains that the consumer is responsible for any difference.

AllAboutCarAccidents.com also indicates that even when a vehicle is a total loss, the insurance company, regardless of which driver is at fault, is only responsible for the actual cash value of the car. If the actual cash value is not equal to the total that the consumer owes on the lease, the finance company holds the consumer responsible for the difference. Gap insurance, which leasing companies sometimes require, makes up the difference.