What Happens to a Car Lease If You Are in an Accident?

What happens to a car lease if you are in an accident depends on the amount of damage the vehicle sustains. While you do not own a leased vehicle, you are still responsible for making sure that the vehicle has insurance that covers its purchase price if you are in an accident. Leasing companies typically require that you carry at least $100,000 for bodily injury for one person, $300,000 for bodily injury for multiple people and at least $50,000 for property damage.

If the accident does not total your vehicle, an insurance company pays for the repairs while you continue to make your lease payments. If the accident involves more than one vehicle, which insurance company pays depends on who is at fault for the accident. If you are in an accident, take pictures of the vehicle and get copies of the police reports to give to your insurance company. If you do not have the repair work done at a shop certified by your leasing company, you risk losing any lease deposit you paid.

If the responsible party's insurance deems the vehicle totaled, it will pay the leaseholder the value of the vehicle before the accident. The insurance company will declare a vehicle totaled if the amount of damage exceeds 60 to 75 percent of its value, according to Online Auto Insurance. You, as the lease owner, are responsible for any of the remaining value of the vehicle not covered by insurance.

Depending on the terms of your lease, your leasing company can require you to pay the remaining payments of your lease contract and any early termination fees. Gap insurance can pay remaining lease payments and fees; but if you do not have a gap policy, the leasing company can require that you pay any remaining amounts immediately. If you are not able to pay the balance, your leasing company may allow you to finance the amount in another vehicle lease or loan.

The insurance company will pay your leaseholder -- not you -- for the value of the vehicle and -- if you have a gap policy -- any remaining lease balance. Since you are leasing the vehicle, you do not own it and are not making payments to own it so you will not receive any payment from the insurance company for property damage. Some lease contracts provide a replacement vehicle, but the options available to you depend on your contract.