What Happens If You Total a Leased Car in Las Vegas?

How Leases Work and Who Actually Owns the Vehicle

In a car lease agreement, a lessor/leasing company (the legal owner of a vehicle, usually a dealership, an automaker’s captive finance company, or a financial institution) grants a lessee the right to use the car for a set period, typically 24 to 48 months.

The lessor retains the actual legal ownership of the vehicle.  However, the registration can have both names — the lessor as the legal owner and the lessee as the registered owner. This way, the lessee will be responsible for maintaining car insurance, paying registration fees, and satisfying other operational requirements set by the Nevada Department of Motor Vehicles (DMV).

A car leasing agreement details the following:

• Vehicle information: Make, model, trim level, model year, vehicle identification number (VIN), and starting mileage.
• The lease duration: This is how long your lease lasts, typically 24 to 48 months.
• Financial information: The manufacturer’s suggested retail price (MSRP), gross capitalized cost (the agreed-upon value of the car/the actual, negotiated selling price), capitalized cost reduction (sum of upfront payments/ the down payment), adjusted capitalized cost (the negotiated starting amount minus any down payments used to calculate monthly payments and depreciation), residual value (the projected value of the car at the end of the lease), and money factor (the interest rate applied to the lease).
• Usage and condition parameters: This clause specifies mileage limits (usually 10,000 to 15,000 miles per year) and wear-and-tear guidelines. It also provides information about penalties for exceeding the mileage limit and the lessee’s responsibility for excess wear and tear.
• End-of-lease details: Information on how a lessee should return the car, the disposition fee, and whether the lessee has the option to purchase or trade in the car at the end of the lease.

Immediate Steps After a Leased Car Accident in Las Vegas

Being involved in a car accident in a leased car has extra steps in addition to the standard post-crash steps, including calling 911 to report the accident and receive emergency care, exchanging information with the other driver, documenting the scene, collecting witness information, and notifying your insurance company.

The added steps are:

• Informing the leasing company, as it’s the legal owner of the car. A leasing agreement specifies how long a lessee has to notify the lessor of an accident.
• Following the leasing agreement’s guidelines on repair. Leasing companies often require using Original Equipment Manufacturer (OEM) parts for repairs.

But what if the car is totaled?

When Is a Leased Car Considered “Totaled” Under Nevada Law? 

Under Nevada law, a car is totaled when the cost of repair is 65% or more of its fair market value immediately before it was damaged/the pre-accident actual cash value (ACV).

For instance, if a car’s value before an accident was $30,000, but the repair estimates reach $19,500 or more after the crash, the car is considered totaled.

Nevada law does not include the cost of painting any portion of the vehicle, replacing electronic components in accordance with the manufacturer’s specifications, or towing the vehicle in the cost of repair when determining if a car is totaled.

When a leased car is considered totaled, your insurance company will assess the vehicle’s pre-accident ACV at the time of the accident and pay the insurance payout directly to the lessor. This effectively results in an early lease termination.

However, you may still owe the leasing company money. Vehicles depreciate fast, which means the ACV can drop faster than your monthly payments can pay off the remaining balance to the lessor. The remaining balance also frequently includes fees and other charges.

Say your remaining balance is $26,000 (using the 30,000 ACV example), but due to depreciation and market conditions, your insurance company values the car at $22,000. Thus, there will be a $4,000 gap, which you owe to the lessor.

It’s highly recommended to obtain GAP insurance when leasing a car. This optional coverage applies when a car is totaled, and the remaining balance is more than the car’s actual cash value. It covers the gap.

So, if you have GAP insurance, you won’t need to pay the $4,000 balance out of pocket. Your GAP provider will pay it directly to the lessor as well.

When the Other Driver Was at Fault: Third-Party Claims in Nevada

Nevada is an at-fault state. Therefore, the driver responsible for an accident is legally and financially liable for damages. If the accident you were involved in was caused by another driver, you can file a third-party claim with their insurance company. This way, their liability insurance can be used to pay the leasing company your remaining balance, including the ACV and the gap amount.

A totaled leased car in Nevada can cost you substantial amounts. The losses need to be covered by the party who caused the accident. You may also incur medical expenses, lost wages, pain and suffering, and other damages.

Unfortunately, the other driver’s insurance company may deny fault or use tactics to reduce payout, including delaying the process, disputing the ACV, assigning comparative fault, and heavily deducting pre-existing damages, such as scratches.

Therefore, it’s crucial to build a strong case that establishes liability and demonstrates the true worth of your claim to be fairly compensated. If negotiations fail to reach a fair settlement, you can go to trial to receive the compensation you deserve in court.

Learn more about how to settle a car accident claim.

Practical Timelines for Insurance and Lease Resolution 

When you report the accident to your insurance company and the lessor, the two companies will follow their own processes.

 An adjuster from your insurer’s company will assess the damage to determine if the car can be repaired or if it’s totaled. This can take one to two weeks. If the car is deemed a total loss, they will assess its ACV and send the valuation to the leasing company.

Once the lessor accepts the valuation, a payout is made. Valuation and settlement can take a week to a month. After this payout, your GAP provider will start processing the gap amount if you have GAP insurance. This can take another 30 to 45 days.

Generally, your insurance company will first investigate the accident to establish fault before settling with the lessor. An adjuster will review the police report, the evidence you gathered, and witness statements. This can take a few weeks to a month.

If it’s determined that the other driver was at fault, you will file a claim with their insurance company, which will have 20 working days to acknowledge receipt of the claim and begin an investigation.

The insurer is also required to accept or deny the claim within 30 days or give an update at least once every 30 days after acknowledging receipt of the claim. If they approve the claim, they have 30 days to pay it. Failure to do so results in the claim accruing interest. 

So, typically, it can take three months for a third-party claim to settle, or longer if the matter goes to court.

When To Hire a Las Vegas Car Accident Lawyer 

It’s vital to hire a Las Vegas car accident lawyer immediately after receiving medical care. Your lawyer will help you gather and preserve solid evidence to determine liability and build a strong case to secure fair compensation from the at-fault party. Additionally, your lawyer will help you understand the terms of your lease and how to protect yourself.

Contact Adam S. Kutner, Injury Attorneys, today to learn more about your options.

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