(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.
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.
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!
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.
