Not everybody owns a vehicle outright or makes payments on a vehicle that they wish to eventually own. In some cases, individuals lease vehicles that they will turn back in after the lease expires. Here, we want to discuss what happens when a leased vehicle is involved in a vehicle accident. Specifically, we want to examine the types of insurance that leased vehicles are required to have in Pennsylvania and go over the process of recovering compensation.
Leased Vehicles and Insurance – Is Anything Different?
Let us suppose for a moment that you sustain injuries or property damage in a vehicle accident caused by another driver. Let us also suppose that the other driver is in a leased vehicle. Will this have any impact on the claim you make against the other driver?
The answer is no. When you make a claim against a driver who was in a leased vehicle, it will be just like making a traditional insurance claim.
First, your claim will depend on whether or not you have “limited tort” or “full tort” insurance in Pennsylvania. If you use the limited tort or no-fault system, you will typically turn to your own insurance carrier to recover compensation for your medical bills. You would make a claim against the leased vehicle driver for property damage. If you use the full tort system, you will make a claim against the leased vehicle’s driver’s insurance carrier for the injuries and property damage.
Individuals in Pennsylvania who lease their vehicles are still required to carry the minimum amount of coverage. This includes:
- Bodily injury liability coverage of $15,000 per person, $30,000 per accident
- Property damage liability coverage of $5,000
- First-party benefits of $5,000 (limited tort)
If you are the one who owns the leased vehicle and is involved in an accident, then you must still carry the minimum required insurance under Pennsylvania law. Additionally, the leasing company will almost certainly require you to carry collision and comprehensive coverages. Your collision coverage is designed to pay for the damage in an accident that you cause, and comprehensive coverage pays for damage caused by something other than a collision, which can include damage from a fire, vandalism, or falling objects.
What is the Insurance Process for a Leased Vehicle?
If you are involved in an accident with a leased vehicle, the insurance process is the same as it would be with any other type of vehicle accident. If you are the one driving the leased vehicle, you will need to ensure your vehicle is taken to a body shop for an estimate of repair costs. Just like accidents involving any other type of vehicle, the insurance carrier will determine how much they are willing to pay for the vehicle and decide whether or not to write it off as totaled or to pay for the repairs. Reach out to a Philadelphia accident attorney to help.
Sometimes, the cost to repair the vehicle is more than the car is actually worth, usually due to the immediate depreciation a vehicle experiences after being purchased and driven. Often, lease agreements will include GAP insurance already built in. If the lease agreement does not do this, it is very likely that the driver will have to purchase GAP insurance. This type of insurance pays the difference between what the vehicle is worth and what the insurance carrier is willing to pay to repair the vehicle.