Suppose leased car is totalled: what are financial implications?

There is additional insurance "GAP". It will pay the rest to buying price. My friend after totaling his few years old Audi got interesting offer - received current value of the car counted by insurer as he left them wreck to be sold in their auction - normally they will even substract remaining value of often "useless" the wreck (he bought similar newer from that amount).

Anyway as you pay an extra lease fees in addition to new price, there is almost no chance you do not loose, but with the GAP (can be made for new or almost new cars only) you lost leasing charges at most, but if it is not brand new car, it would not have value you receive, so you would use it till accident without quite high costs of wear.

Conditions should be similar everywhere - service and work is expensive, so preferred and secure method is often dispose wreck or sold it not repaired...

If it would not be your fault, you may ask offender to pay all your costs not only those covered from his insurance, but often at court or you can insure also lawyer coverage and let that company do this work or get all your rights if insurer fail to pay them all for you at their costs.

There is also interesting lemon car law in some countries.

And 2 examples of greedy services - Ford Transit - plastic cover on starter damaged during accident - insurance company had to pay over €800 for replacement, dealer kept it and sent to Germany for refurbishment, small tick on bumper in Germany (only paint damaged) - probably replacement too as damage paid around €2500.

So as you can see and friend insurance liquidator told me services live from accidents and love to do anything to increase final invoice... Insurance companies even require specific invoice counted by their rules as prices or time spent on common service tasks are often even higher then should be (services do not respect nor want to work in-line with maker standard times at all or love to charge for useless or not done work).

You must pay every dollar of the value of the car as agreed to on the lease. Period.

Some people carry insurance. This insurance will pay out based on the insurance policy. The usual default is that the insurance will buy you a non-smashed used car of comparable make, model, age and trim options. Minus any deductibles.

Note that these are two different numbers calculated in two different ways.

Generally if the second is larger than the first, the money goes into your pocket. That is your equity in the car.

If the first is larger, that means you were upside-down on that car (negative equity) in which case you must pay the difference.

How would you get upside down? One of several ways. That isn't uncommon in a lease, your car takes the biggest depreciation hit the moment you drive it off the lot. It's now a "used car" and sells for less. Or, your previous lease may have been upside down, and rather than make you write a huge check, they folded this debt into your next lease. Happens all the time, and I just described how you can bury an upside-down loss into another new car purchase.

If you don't have the pile of cash to settle up, you can't just shrug it off like a non-recourse mortgage. You must arrange to settle the debt. Assuming you need a car, practicality may well drag you to do it again, buying another new car simply to rollforward the debt you can't pay.

It is also possible to buy gap insurance to cover exactly this eventuality. The lender might even make you buy it (not unlike a house's PMI). Obviously gap insuance won't cover old debt you rolled into this lease...

This very thing happened to me, I was about 5 months into a 3 years lease when I was caught in a multi-car accident on a highway. The car was destroyed. My insurance company paid out the leaser, and I actually got a refund of overpayment from the leaser (guess the insurance company paid more than was owed by me on the car). (Ontario, Canada, if that makes any difference).