When it doesn’t work, you’re left owning a totaled vehicle that the insurance company won’t pay out a dime on.
@max_g Can you walk me through the logic of how the insurance company would escape liability and fulfilling the legal requirement of restoration to the OP to a pre-collision state?
I think it revolves around the fact when insurance policy was purchased you disclose it’s a lease.
Doesn’t “change of owner” constitute as misinformation leading to denial of a claim?
Read from here onwards:
Let’s follow that logic. Are you saying because you opted to purchase the vehicle mid-lease that constitutes fraud? People purchase their leases on the regular. I would invite someone to show me a policy declaration clause or case law that states that on the date of loss the interest in the vehicle is static and cannot be changed. A person can change their interest in an asset or item, buy selling, gifting or otherwise transferring their interest in any given asset or property on any given day, unless there is an agreement, case law or clause between the insured and the insurer to the contrary. Further, the party at fault is liable to the OP. There was no agreement between the at-fault party’s insurer and the OP as to how the interest in his vehicle would be held (lien, unencumbered) nor can they limit the right to transfer that interest.
BMWFS has the right to immediately terminate the lease in the event of a total loss, meaning the leasee cannot buy it out.
This is from a BMWFS lease contract in the Shared Deals section.
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Cmon are you going to be this disingenuous just for the sake of prolonging an internet debate?
Buying a leased car mid-lease is not fraud. Obviously. Now one said it was.
The fraud part is where the buyer pretends (technically, omits to mention) that the vehicle in question is already totaled.
Let’s say a car was worth 30k before it was totaled. It’s worth 3k totaled. You buy the car knowing it’s totaled and then try to collect 30k or thereabouts from the insurer?
That’s insurance fraud in both NY and NJ.
It’s irrelevant how you were able to acquire said vehicle. Whether it was leased to you or you found it in a ditch or a junkyard or wherever, it’s only relevant to the point that proving fraud just became even easier because the lessee leased it.
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@max_g I disagree. If the OP is the registered owner he has an insurable interest in the vehicle with HIS insurer. At the time of the accident, the OP had an equity interest in his registered vehicle, which the at-fault party is obligated to remedy.
I’m not suggesting to fail to disclose the loss to the lienholder, if required contractually. The scenario you presented lacks context and detail and based on that very limited fact pattern I would wholly agree it would be insurance fraud; where in that specific scenario you present, you don’t say whether you purchase your equity interest as the registered owner of the $3k totaled vehicle.
@Jon You said something absolutely key related to BMW (not RAM), which says BMW has the RIGHT to immediately terminate the lease. This does not mean BMW will automatically take that path. It’s worth the conversation with the respective finance company as to options they’ll agree to.
He can and should go after the at-fault party’s insurer and/or estate.
But he should go in with eyes wide open and the facts straight.
He had no equity in the vehicle. Nada. Zilch. All he had was an unexercised option which is now void. What, if any, monetary value that option had prior to the accident is going to be argued between him and the other party(ies).
But buying the vehicle after it was totaled and trying to collect pre-accident value from the insurer is going to create more headaches at best, realistically a large financial loss, and jail time at worst.
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I think the answer is somewhere in the middle.
(Disclaimer… I work in insurance, but not in claims)
Agree people buy out leases all the time and nothing in an auto insurance policy that would consider that event a material issue. You are still the named insured on the auto policy and they would have paid out either way, arguably for the same value, whether it was financed or leased. You should let your insurance company know when you buyout a lease so they can update lessor/lienholder info but it doesn’t change the coverage for your car.
I think the leasing company has a leg to stand on though if they want to fight and say it’s their money, If they can prove that at the moment in time when the accident occurred they were the owner of the vehicle - that is the “occurrence” that triggers insurance coverage, and they had right to payment per your policy as the listed lessor.
(Also if you use anything form of secured debt to try and pay off and don’t disclose the car is wrecked, that is likely fraud - but a different topic)
In my opinion this doesn’t feel like “insurance fraud” since they aren’t harmed- they are paying the claim either way since the vehicle was covered when the loss happened, but the bank could have a case against you for stealing from them.
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When we are talking about a lease situation where the lessee is not at fault, this conversation gets even more interesting as the at fault person would be liable for the property damage to the owner of the vehicle. Even if we argue that in a case where the lessee is at fault there is a path to buying out the totaled vehicle (which I’m not convinced by), there certainly doesn’t seem to be any justification for why the at fault party’s insurance here would have any obligation to pay the lessee if they bought out the vehicle after the fact.
Even in that optimistic scenario there are places to get tripped, like when used car comp/collision policies require the insured to get third party photo inspections (typically VIN plus 5-6 angles of the whole car). One of the reasons being to prevent fraud of buying a previously damaged vehicle and then making a claim afterwards.
If a leased car buyout triggers that requirement then what?
And once we get in the weeds there other headaches because the payouts aren’t necessarily the same. Like the lessor would receive ACV but a private owner would receive ACV plus applicable sales tax in NY. Even if you agreed to, the insurer cannot simply mail you a check for ACV sans sales tax in violation of state law.
Sorry… I thought this thread was a Super Bowl prediction. 
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This is what my contract says so who knows. I’ll update the thread once I hear from insurance or the lessor.
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Just an FYI I am receiving a check directly from the insurance company for the difference between the market valuation and the Ram’s payoff. In addition I spoke to a rep at Chrysler Capital and they said that if the insurance company paid the full amount to them they would in turn send me a check for the amount in excess of their payoff.
I’ve already picked up a Nissan Frontier S. Its not the Ram but I needed a truck and it was the only deal around. I also put in an order for a Rubicon 4xe we’ll see how that works out. Thanks for everyones help. Love this board!
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Congrats! Glad it worked out for you.
Since there seems to be quick and obvious consensus among all parties, was it the contract or state law that dictated the outcome? I can’t read the contract excerpt posted above
I don’t know for sure but when speaking to the rep at Chrysler Capital she sounded like it was company policy so I would tend to believe it’s contract based rather than a state law. The only issue she brought up was whether the insurance company would pay the full amount to them and in turn they would cut a check to me for the difference or the insurance would break up the amount and pay each of us directly.
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That’s pretty generous of CCAP - unless forced by state laws lol
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How long did the process take. I’m in a similar situation and I’m wondering if it’s a Two or three month process
I’d say 2 months from the date of the accident.