Totaled loss Leased BMW cars

Ask the Hackrs
41

The first thing to consider is whether or not you have gap insurance for those vehicles. No matter how the payout from the at-fault party’s insurance gets applied, gap insurance will cover the payoff from your lease payments. If you didn’t add this coverage to your own insurance, check your leasing contract since many leasing companies roll a gap waiver into your lease.

If you don’t have any gap insurance, how BMW applies the insurance payment surplus is based on its refund policy. Typically, early termination fees subtract your remaining payments from the money that’s credited toward the car’s value. You can check how your lease calculates termination fees and handles surplus amounts in your leasing contract.

However, with or without gap insurance, you may owe other fees like excess wear and tear or late payment fees. Be sure to ask your leasing company questions if you don’t understand the charges.

You can find more info here: FRB: Vehicle Leasing: Up-Front, Ongoing, and End-of-Lease Costs: End of Lease Costs: Closed-End Leases

42

I was in an accident and my leased BMW was deemed a total loss. My insurance company (State Farm) paid off BMW $5k more than my lease payoff was. I was under the impression from searching on this forum and through talking with BMW and State Farm that they would be cutting me a check for the overage but now BMW is claiming that money is theirs. I am simply SOL?

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43

Simple “total loss bmw” search will show you multiple discussions on this. Not sure if you read anything after you searched.

44

BMW has no incentive to give the money back. I would take it up with State Farm. I have seen posts from others who have gotten big checks back after totaling BMWs (the guy who got $10k back from his insurance after totaling a brand new i3 comes to mind) but those checks were directly from the insurance company, not from BMWFS.

45

I have been talking with both State Farm and BMW. I’m getting nowhere.

State Farm says they paid what BMW said they had to. Even they are surprised BMW is playing it this way.

After years of BMW leases and often several of their vehicles in my driveway, I’m afraid I am no longer a fan.

I have spent hours and hours on the phone with BMW Financial over the last several days trying to get a refund from them back on the total loss over my vehicle.

Simply explained, my insurance wrote BMW a check for more than my residual, my payoff and even my original cap cost (I had a true unicorn deal). BMW now claims the overage is theirs.

The strange part is their justification.

They told me numerous times that it is not written in my contract that the money is theirs to keep (but they have had enough issues with this that their lawyers are planning to add that verbiage soon).

They also told me that by state law in all 50 states that my insurance company had to pay them whatever they say is owing. They could not provide me with the name of the law and I honestly have doubts there is such a law.

I asked if that made their GAP irrelevant. I could not get a straight answer but did find out BMW is self-insured regarding GAP.

They said that soon as I was in an accident my payoff no longer was valid. They stated that an accident voids the contract amounts and they can demand more (which in this case was a lot more than even high market value).

They said they they use absorb overages like mine to compensate for the time they miscalculate residuals to be under market value at lease end. The market value of my vehicle was definitely lower than my residual even in this crazy market.

Basically, my insurance company negotiated with me the amount prior to even knowing it was a leased vehicle. Then contacted BMW and they said “sure we will take that amount”. Now they are viewing it as extra profit and won’t release it.

I realize we are in unique times but whole situation has left a bad taste in my mouth.

FYI I have also contacted several other OEM leasing companies and have yet to find a single one that doesn’t say that they would refund the excess in that situation. It sounds like this will be my last BMW lease.

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46

I would have expected exactly this outcome if the insurance company paid BMFS directly. They are under no obligation to return the extra money to you. Their property (the car) had appreciated in value and insurance paid them the current value of that property.

Even the other manufacturers who you contacted are not legally required to send you the extra money and I think they actually won’t when it comes down to that situation.

The only possible way you could have gotten anything out of this was if you spoke to your insurance company and somehow convinced them to send BMW only the payoff amount and send the rest to you.

(The unethical way would have been to payoff the car immediately as soon as you realized that it was totaled and just gotten the full check from the insurance company. I think this might break some laws but I am not sure which ones)

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47

I don’t see the Ethical issues with this.

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48

Yea I don’t see the ethical issue. However, timing wise it may not work out given how long the DMV may take to give you title. Plus you’d probably be on the hook for the sales tax, so you need to be sure you’re likely to get post-sales tax equity out of it. If the value/pay-out determined by the insurance carrier is less than this value, you just cost yourself money.

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49

Where is that guy @mah4546 that was arguing with about overage going to the manufacturer instead of lessor?

50

I’m here. The overage belongs to leaseholder and not BMW. There is no argument. The leaseholder pays the insurance and receivers the value of paying that insurance. The overage is a benefit of your insurance policy (owned by the leaseholder) and not a benefit of the vehicle (owned by BMWFS).

@Lookingforacardeal keep fighting them. Also, there are examples on this very forum of the same exact situation with BMWFS, and BMW sent the overage back to the lease holder.

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51

BMWFS is a named insured on @Lookingforacardeal’s auto policy. If BMW was not on the policy, insurance would not issue payment to BMWFS. There is a contractual obligation to BMWFS no matter who paid the premium because you agree to name a lien holder on your policy when you lease/finance. How the loss was paid by the insurance company could be an issue depending on the laws of the state. In California, a 1st party must receive a written explanation of the total loss payment prior to carrier issuing payment. The carrier will obtain a payoff from the finance company prior to issuing payment. The insured knows the vehicle value, how much is going to lien holder and if there is any amount left over the carrier pays to the primary insured. There is no basis for an insurance company to issue an overpayment to the finance company. A finance company can’t claim a payoff that is not factually correct. Carrier should be treating both insureds equitably.

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52

This is definitely true of a financed vehicle. But gets cloudy on a leased vehicle as there’s a concern over ownership. This is where state law on the matter drives how it may ultimately work.

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53

I’ll hurry up and wait to see this happen.

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54

Not trying to wade into who gets any overage money, just a general question… would the lessor be entitled to the payoff plus any remaining lease payments, or only the payoff amount?

55

The current payoff at any time includes remaining payments (some will exclude interest from that calculation).

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56

It doesn’t get cloudy, there’s no argument, overage goes to the party that pays the insurance.

57

Show me the actual text of California law that states that. If you don’t retain ownership of the asset, just paying the insurance doesn’t necessarily entitle you to overage. It could, but it’s cloudy, and yes there is an argument. Hence why all of us are even having this conversation.

58

Take a real good look at your Registration Card.
The OEM is listed Twice, in the ‘Owner Section’ and in the ‘Lienholder’ section

59

There’s no text. It’s called common law. It applies in 49 states. Louisiana is the one state that doesn’t use it, but same result would still apply.

The overage is a benefit of the insurance policy, it’s not inherent to the vehicle. The primary party on the insurance gets the benefit.

I don’t have any burden to prove anything here. Literally nobody can point to one single instance of the leasing company holding the overage. This forum is full of situations where there was a holdup, so-called “experts” lie to OP and make up reasons why the leasing company gets to keep the overage, and then bam, a few months later OP gets a check for the overage. Even in this case, it’s just a matter of paperwork holdup, OP is getting a check in the mail. It’s automatic.

60

OP (@briancho0291) Please update us if you ever end up getting a check from BMFS for the overage amount.

1 Like