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Wondering what happens if you total a leased car? Crashing a leased car in an accident is stressful enough. But when that car isn’t technically yours, the situation becomes even more confusing—especially if you weren’t at fault.
Texas consistently ranks among the states with the highest number of vehicle crashes. In 2024 alone, the state saw over 475,000 car accidents, according to the Texas Department of Transportation. With many Texans behind the wheel of leased vehicles, understanding your lease agreement and insurance obligations after a crash is more important than ever.
This guide breaks down what happens if you total a leased car, including who’s responsible, how insurance works in Texas, and what steps to take next. Whether you’re leasing through a dealership or third-party financing company, knowing your rights and responsibilities can save you from surprise fees or legal headaches.
If you’ve been injured on the road, contact the Texas car accident lawyers at AK Law Firm for a free case review.
What Does It Mean to Total a Leased Car?
Leasing vs. Owning: A Quick Overview
When you lease a car, you’re essentially renting it long-term from a leasing company. You make monthly payments and agree to return the vehicle in good condition at the end of the lease period. Ownership remains with the leasing company—not you.
What Counts as a Total Loss in Texas?
A car is considered “totaled”—or a total loss—when the cost to repair it plus its salvage value exceeds its actual cash value (ACV). According to the Texas Department of Insurance, this is the standard insurers use to determine if a vehicle is no longer worth fixing.
For leased cars, total loss scenarios require extra steps since you’ll still owe money to the lessor—even if the vehicle is gone.
Who Owns a Leased Car—And Why That Matters
In a leasing arrangement, the leasing company remains the legal owner of the vehicle. That means they—not you—hold the title. When a leased car is totaled, the insurance payout will go to the leasing company, not directly to you.
Lease Agreements and Accident Clauses
Your lease agreement will outline your responsibilities in the event of damage or total loss. Most agreements require you to maintain comprehensive and collision insurance, and you may also be on the hook for fees not covered by insurance—like early termination charges or excess mileage.
Understanding who owns the car is key to knowing who gets paid, who’s liable, and what financial obligations remain after a crash.
What To Do After a Leased Car Accident
So, what happens if you crash a leased car? Like any motor vehicle accident, your number one priority should be your safety.
Follow these steps to protect your health and your legal interests:
Step 1: Get Medical Attention
Even if you feel okay, seek medical care. Not all injuries are immediately visible—and medical documentation is key for insurance claims.
Step 2: Report the Accident
Call law enforcement and file an accident report. This is required in Texas if there are injuries or property damage exceeding $1,000.
Step 3: Notify Your Insurance Company
Report the crash as soon as possible. Be honest and provide all necessary documentation, including photos, police reports, and medical records.
Step 4: Contact Your Leasing Company
Your lease may require you to notify the leasing company immediately after any major damage. They’ll also want updates on insurance outcomes and vehicle status.
Step 5: Get a Vehicle Damage Assessment
Your insurer will inspect the vehicle to determine whether it’s repairable or a total loss. If it’s totaled, they’ll calculate the payout based on ACV.
Step 6: Understand Your Financial Responsibility
If the insurance payout doesn’t cover the lease balance, you may be responsible for the difference—unless you have gap insurance (more on this next).
How Insurance Works for Totaled Leased Cars in Texas
Texas follows an at-fault insurance system, which means the person who caused the accident—and their insurer—are financially responsible for the damages. This applies to both leased and owned vehicles.
Types of Insurance Coverage That Matter
For leased cars, the following types of auto insurance are typically in play:
- Liability Insurance: Pays for damages you cause to others. Texas requires minimum liability coverage, but leased cars often require more comprehensive policies.
- Collision Coverage: Covers damage to your car (or leased vehicle) if you’re in an accident, regardless of fault.
- Comprehensive Coverage: Covers damage not related to a collision, such as theft, fire, or flood.
- Gap Insurance: Fills the “gap” between what your insurance pays and what you still owe on your lease.
Without gap insurance, you could owe thousands out of pocket if the car’s actual cash value is less than the remaining lease balance.
For example:
If your insurance company offers $18,000 for your totaled leased vehicle, but you still owe $22,000 on the lease, you’re responsible for the $4,000 difference—unless you have gap coverage.
What Happens to Insurance Payouts?
Once the vehicle is declared a total loss, your insurance company will send the settlement directly to the leasing company. If there’s a leftover balance (because of depreciation or lease terms), you may have to pay the rest. If there’s any excess after satisfying the lease—rare, but possible—it may be refunded to you.
Sources: Texas Department of Insurance | Tips to Help You Shop for Auto Insurance
What If the Accident Wasn’t Your Fault?
“I was in a leased car accident that’s not my fault… now what?”
If another driver caused the crash, you have the right to pursue compensation through their liability insurance. Since Texas is an at-fault state, you are not financially responsible if you are 0% at fault.
Filing a Third-Party Insurance Claim
You’ll need to:
- Collect the at-fault driver’s insurance information
- File a third-party claim with their insurer
- Provide evidence: accident report, photos, witness statements, and medical documentation
- Follow up to ensure prompt processing
Comparative Negligence in Texas
Texas follows modified comparative negligence rules. If you’re found to be less than 50% at fault, you can still recover damages. But your compensation will be reduced based on your percentage of fault.
For example:
If you’re 20% at fault and your damages total $10,000, you’ll receive $8,000.
Legal Options if Insurance Denies Your Claim
If the at-fault driver’s insurance denies your claim, delays payment, or offers an unfair settlement, you may need to escalate the issue.
This is where working with a car accident attorney can make a significant difference.
How a Personal Injury Attorney Can Help
A skilled personal injury attorney can help you:
- File a third-party claim for property damage and personal injury
- Recover deductibles, medical bills, lost wages, and lease-related penalties
- Negotiate with insurance companies and leasing companies
- Ensure you’re not blamed unfairly in comparative fault situations
If your leased car accident wasn’t your fault, or you’re unsure how to proceed, contacting a lawyer can save you time, stress, and unexpected costs.
Speak to a car accident lawyer today and explore your options.
Legal and Financial Considerations After a Leased Car Accident
A leased vehicle accident involves more than just damage to the car. You should also be aware of the contractual, legal, and financial implications.
The Gap Between Insurance Payout and Lease Balance
When a car is totaled, the insurance company issues a payout based on the ACV. But because leased cars depreciate quickly, that payout may be less than what you owe.
This is where gap insurance plays a vital role. Without it, you may be legally required to cover the remaining balance—even though you no longer have the vehicle.
Pro Tip: Always check your lease agreement to see if gap insurance is already included. Many leasing companies build it into the contract, but not all do.
Lease Contract Penalties
Always request a final account statement from the leasing company to confirm whether additional charges apply. Even after insurance settles the claim, you could still face:
- Early termination fees if the lease ends prematurely
- Excess mileage charges based on your last recorded odometer reading
- Wear-and-tear assessments if pre-existing damage was present
- Administrative processing fees tied to the total loss claim
How a Car Accident Attorney Can Help
A car accident attorney can guide you through the post-accident maze. Their role isn’t just about injury claims—it includes protecting your financial rights based on the lease and insurance implications.
Here’s how an experienced attorney like a Dallas car accident lawyer from AK Law Firm can help you:
- Review your lease agreement and insurance policies
- Determine whether you’re responsible for out-of-pocket lease balances
- Negotiate with insurers to avoid underpayment
- Pursue claims against at-fault drivers
- Ensure your medical and wage loss claims are fully addressed
If you’re feeling overwhelmed, consulting a personal injury attorney can provide peace of mind and clarity on next steps.
Need help now? Contact AK Law Firm in Houston or Dallas for a free consultation.
FAQ
What happens if you total a leased car and have gap insurance?
If your leased car is totaled and you have gap insurance, the policy will cover the difference between your insurer’s payout and the remaining balance on your lease. This prevents you from having to pay thousands out of pocket if the insurance check doesn’t cover the full amount owed.
Will I get money back if my leased car is totaled?
Usually not. Since the leasing company owns the vehicle, they receive the insurance payout. In rare cases where the payout exceeds the remaining lease balance, you might receive a small refund. But this is uncommon with leased vehicles due to depreciation.
Do I still have to make lease payments after totaling a car?
Yes—until the insurance claim is settled. You’re still contractually obligated to make payments, even if the vehicle is no longer drivable. Once the lease is paid off (via insurance or gap coverage), your payments will typically stop.
Can I sue the at-fault driver for totaling my leased car?
Yes. If another driver caused the crash, you can pursue a third-party claim against their insurance or file a lawsuit to recover damages. These may include lease-related penalties, out-of-pocket expenses, lost wages, or injuries.
Is it worth hiring a car accident attorney for a leased car accident?
Yes—it’s worth getting an attorney for a car accident, especially if the accident wasn’t your fault or if insurance isn’t covering the full amount owed. An attorney can help you understand your lease agreement, negotiate with insurers, and recover damages from negligent drivers.
Get Legal Help After a Leased Car Accident
Totaling a leased car can create a confusing mix of insurance claims, lease obligations, and unexpected costs. Whether the accident was your fault or not, you don’t have to navigate it alone.
Now that you know what happens if you total a leased car, get help navigating the aftermath. At AK Law Firm, our team helps drivers throughout Texas resolve leased vehicle accidents with minimal stress and maximum protection. When you need to focus on recovering from your injuries, we provide the legal support and guidance you need to secure maximum compensation.
Contact us today for a free consultation.
