Getting a new lease vehicle after an accident

Accidents happen. And sometimes, accidents happen in a lease car. What do you do?

Obviously, when you have an accident there are different severities. You could be involved in a small accident where your car is bumped or dented slightly, or you could end up writing the vehicle off. Regardless of how big or small your accident is, there is a process that you have to follow and it’s important that you know exactly what to do should your lease car be in an accident.

We at OSV don’t tend to deal with this directly. We aren’t the owners of the vehicle and once your car is delivered and the agreement activated, there is little we can do. However, we are there for you throughout the whole leasing journey including the duration of the agreement so we do advise our customers on what to do in this situation. Which is why in this article we are going to talk about what happens if your lease car is in an accident, and what to do should you need a new lease vehicle.

What happens if my lease car is in an accident?

In this article, we’re going to talk about what to do after the initial incident.

If you are in an accident with your lease car then you will have to ring the finance house as soon as possible. You will have to find out whether your vehicle can be repaired or whether it is a write-off. If your car can be repaired then this is when your insurance company come in. The finance house will be the ones who stipulate where you can get your car repaired and where you cannot. We would recommend that you put your insurance company in touch with your finance house so they can talk directly and ensure that everything is in order. The process varies from finance house to finance house, insurance company to insurance company so we would say that putting them in contact with each other is the best thing to do. 

What happens if I write off my lease vehicle?

If you’ve written off your lease vehicle then the process is different because the finance house will treat it as if you have bought the car and therefore ended the agreement.

However, you will still have finance left to pay so the finance house will decide on a settlement figure which you will then have to pay off. Hopefully, the insurance company will pay out enough money to cover the settlement fee but if it doesn’t then you will have to make up the difference. Unless you have GAP insurance but we’ll go into that in a bit.

How much will the settlement fee on my lease car be?

We can’t give you an exact figure on how much your settlement fee will be, that will be down to the finance house. If you have a contract hire then the finance house will give you a fee as if you wanted to buy the car.

There are a number of things that affect how much the settlement figure will be. For example; 

  • How much the car has depreciated
  • The mileage
  • The type of car
  • Market value of the car
  • How much you have paid in monthly payments so far

So we can’t tell you how much it will be and nor can you really judge how much it will be. You will have to wait for the finance house to give you a fee.

If you have a hire purchase, however, then it’s a bit different. This is because you went into the agreement with the intention of buying the car at the end. So the amount you will have to pay is simply the remaining balance. However, there is a chance that this could be more than the insurance pay-out depending on how far into your contract you are. So there is still risk of a shortfall. You can watch our video on hire purchase below.

Getting a new lease vehicle after an accident

So now you’ve paid the settlement figure you need to look at getting a new vehicle. Because you have written your vehicle off and the finance house have treated it as if you bought the car, your contract is now over. This means you have to take out a brand new contract with a new car. Of course, you can still get the same car as you had before but you will have to start the process again.

In terms of insurance, you will have to cancel your policy and take out a new one on the new car. It will have the same effect on price as it would if you crashed and wrote off a car that you owned.

Getting a new car after your accident shouldn’t be a problem. Because it’s the same process it will all be fairly straightforward, the only thing that will be affected is your insurance.

What is GAP insurance?

We mentioned GAP insurance above when we were talking about a potential shortfall in the settlement figure and the amount your insurance company has paid out for the car.


GAP insurance, or Guaranteed Asset Protection insurance, covers the difference between what your insurance company pays out and what you have to pay the finance company in the event of a write-off.

Essentially, it eliminates the risk of a shortfall and stops you from ending up in a negative equity situation. We do have more information on this in our article dedicated to GAP insurance as well as our infographic which you can see below. We do recommend that you consider taking out GAP insurance when you first lease a car because it could potentially save you a bit of money. In conclusion, if you write off your lease car you will have to get a brand new one on a different agreement. This is because the finance house will treat it as if you are buying the car and therefore will ultimately end the agreement. You will have to pay a settlement fee, and this can vary depending on a number of factors. However, you can avoid a shortfall if you opt for GAP insurance at the start of your contract.

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