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      11-28-2009, 03:23 PM   #23
aspiring335
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Sorry, what you are saying just doesn't make sense. You must be misunderstanding your sister-in-law's situation or simply making it up. Sorry to be so harsh, but it is simply not true that an insurance company will refund your lease payments in the event of a total loss. If you had done a single payment lease, they would most likely pay out the balance of the single payment attributable to the remaining term.

Limited waiver of depreciation, gap insurance, whatever you want to call it, is available for leases, but it simply means that you won't have to pay the lease company anything if the assessed value of the vehicle is less than the balance owing on the lease. For example, if you didn't have this insurance, totaled a leased vehicle, the insurance co. assessed it as being worth $25k but your current payoff amount was $30k, you would owe the lease company $5k. Gap insurance ensures you don't have to pay this $5k.

In your "example" you're even claiming that the insurance company paid $24k to Toyota and $11k to your sister-in-law??? They paid out $35k for a three-year-old vehicle that was $24k when new?

If you lease a vehicle, your name may very well be on the registration documents along with the lease company (as is the case in Ontario ). However, you do not have title to the car -- that rests 100% with the lease company, they own the car and that does not change at any point during the term of the lease agreement. Even if you intend to buy out the vehicle at the end of the lease, that is completely irrelevant -- you have zero ownership of the vehicle until you actually buy it. The insurance company is not going to compensate you for the amount you have paid so far, just in case you were planning on buying it out.

A vehicle lease is a rental agreement with an option to buy. Your monthly payments are for the use of the vehicle, so in month one your legal ownership of the car is no different than in month 35 (i.e. you don't own it at all). A financed vehicle is in your name, but has a lien registered against it by the provider of the loan. That lien ensures that when you sell the car, total it, whatever, they have first claim on the proceeds.

So, that being said, why would an insurance company refund you money for something you have already received (use of the vehicle in the months preceding the total loss)? It would be no different than totaling a rental car at the end of a two-week rental and expecting to get reimbursed for the cost of renting the vehicle.

You can keep saying that this is how gap insurance works for leases, but it just isn't.

Quote:
Originally Posted by benyl View Post
Wow, you guys need to talk to you insurance companies.

I have seen it first hand as it happened to my Sister in law about a month ago.

She totaled a 2006 Toyota Corolla S.

The insurance company (hers, not Toyota Finance), paid out the rest of the lease and the buyout. They paid out the full value of the car, to Toyota. $24K. The buyout was $13K and she was in the 35 month of a 36 month lease.

Toyota sent her a check, which I saw in person, for $11K. She basically drove the car for free for the past 35 months (except maintenance, fuel and insurance payments). She even got the GST back. Sure, she will have to pay more for insurance, but it worked out pretty good for her.

My C63 is paid for. My insurance agent said that the coverage I have will pay me out the full purchase price if the there is a total loss of the car in the first 3 years.

In Alberta, a leased car has both the Owner and the finance company on the registration and insurance cards. Not just the finance company.
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Last edited by aspiring335; 11-28-2009 at 03:51 PM.
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      11-28-2009, 03:25 PM   #24
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All BMW leases include gap insurance, so there is no need for anyone to purchase it separately.

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Originally Posted by A.Kon View Post
Insurance companies usually offer loss/depreciation insurance for purchasers of NEW cars. Not all insurance companies offer it but I think most do.

Basically, in the event of a total non-salvagable accident, the insurance company will refund you the entire purchasr price of the car + applicable taxes with no depreciation charges. I think the insurance companies only offer it for like the first 3 years and the premium gets a lot higher if you want to extend beyond 3 years (probably closer to $50 per month depending on the car if they offer it at all).

It's really a no brainer - everyone who has leased a car should have this depreciation protection just in case you get into a total accident tmrw. If you don't have this protection and you get into a complete loss accident, then you will have to pay BMW whatever you owe but the insurance company will only give you the fair market value of the car.

This happened to my friend a few years ago ... he declined the depreciation insurance which was about $5 per month at the time, then about 8 months after he bought his new car, he got into a huge no fault accident and ended up having to pay the remaining loan to the finance company, while the insurance company only gave him half of the MSRP because that was the market value of his car.

Needless to say he learned his lesson and pays for the depreciation insurance now.
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      11-28-2009, 04:25 PM   #25
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I am guessing that the $11K payout was for PERSONAL DAMAGES stemming from the accident, not for the car that wasn't hers.
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      11-28-2009, 05:28 PM   #26
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Quote:
Originally Posted by Bora20 View Post
I am guessing that the $11K payout was for PERSONAL DAMAGES stemming from the accident, not for the car that wasn't hers.
Good point, that probably explains the $11k.
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      11-30-2009, 11:35 AM   #27
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Quote:
Originally Posted by aspiring335 View Post
Good point, that probably explains the $11k.
Ahaha, you can call me a liar, but why the hell would I make it up? Nothing for me to gain by doing so.

As I said before, but I will make it more clear:

Toyota got the full payout for the car. $24K from her insurance company. That is the price that was negotiated with the dealer when she started the lease.

The final payment and buyout was $13K as she was in month 35 of a 36 month lease.

Sis in law got a check from Toyota for $11K. If she didn't cash it already, I would take a picture for you. $11K is the difference between the buyout (+last payment) and the original price of the car.

Like I said, I have no reason to lie about it.

I just called my insurance broker (all state) and the limited waiver of depreciation, which is the coverage my Sis in law had, covers both LEASE and purchased cars. In Alberta anyway. The caveat is that you must get coverage on a new car and it cannot be added later (say 2 months down the road).
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      11-30-2009, 11:45 AM   #28
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Nobody is saying that limited waiver of depreciation does not cover leased vehicles. What I am saying is that you do not get refunded for lease payments you have already made. It simply covers a shortfall in equity in the vehicle.

Call All State and ask them if they pay you, the lessee, for your past lease payments in the event of a total loss. I guarantee they will say no.

As Bora20 indicated, your sister-in-law may very well have received money to settle a personal injury claim, but she will not have received payment for past lease payments.

What more can I say? If you lease, you do not own the vehicle, period. The insurance company pays the lease company out in the event of a total loss.

Quote:
Originally Posted by benyl View Post
Ahaha, you can call me a liar, but why the hell would I make it up? Nothing for me to gain by doing so.

As I said before, but I will make it more clear:

Toyota got the full payout for the car. $24K from her insurance company. That is the price that was negotiated with the dealer when she started the lease.

The final payment and buyout was $13K as she was in month 35 of a 36 month lease.

Sis in law got a check from Toyota for $11K. If she didn't cash it already, I would take a picture for you. $11K is the difference between the buyout (+last payment) and the original price of the car.

Like I said, I have no reason to lie about it.

I just called my insurance broker (all state) and the limited waiver of depreciation, which is the coverage my Sis in law had, covers both LEASE and purchased cars. In Alberta anyway. The caveat is that you must get coverage on a new car and it cannot be added later (say 2 months down the road).
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      11-30-2009, 12:49 PM   #29
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Quote:
Originally Posted by aspiring335 View Post
Nobody is saying that limited waiver of depreciation does not cover leased vehicles. What I am saying is that you do not get refunded for lease payments you have already made. It simply covers a shortfall in equity in the vehicle.

Call All State and ask them if they pay you, the lessee, for your past lease payments in the event of a total loss. I guarantee they will say no.

As Bora20 indicated, your sister-in-law may very well have received money to settle a personal injury claim, but she will not have received payment for past lease payments.

What more can I say? If you lease, you do not own the vehicle, period. The insurance company pays the lease company out in the event of a total loss.
If you read each of my posts, I specifically said that she got a check from Toyota and not the insurance company. There was no personal injury claim.

The limited waiver premium is paid by the user, not Toyota. All Toyota is interested in is the money they are owed or the car in return. They got the money. How can Toyota justify keeping the difference? They already got the lease payments and they got the buyout.

haha, I find it so funny that you guys are trying to be correct.


I just called BMW financial services.

They specifically told me that with the waiver of depreciation, all payments will be refunded to the customer in the event of a total loss on a lease.

So, if you do a one payment lease, get the waiver of depreciation. You will get the entire amount back.

Call them yourself if you don't believe me.
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      12-01-2009, 03:54 PM   #30
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Quote:
Originally Posted by Astroboy View Post
I'd never do it for the same reason I'd never give a downpayment. If your car is written off (stolen and not recovered or damage from accident) your insurance company pays the leasing company. They do not pay you. So if you give a 10k down payment on a 3 year lease and one month later your car is stolen and not recovered, you basically paid 10k to drive a car for a month.

Interest rates would have to be really high for me to consider this. And with every leasing method, you always pay interest on the residual value, so the interest savings is only on the value of the car you are consuming.
Who told you that? I've had a car stolen 4 years after I leased it. They gave me blackbook value for it. The remaining value from Toyota Financial was $16000. However, the car was worth $26000 since the car was low mileage.

The insurance company sent the cheque for $26000 to Toyota so yes.. they pay the leasing company, but Toyota sent me back a cheque for $10000. On top of that, I got all my GST and PST back from the insurance company.

So I don't agree with your first part.
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      12-01-2009, 10:19 PM   #31
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Quote:
Originally Posted by nospleeny View Post
Who told you that? I've had a car stolen 4 years after I leased it. They gave me blackbook value for it. The remaining value from Toyota Financial was $16000. However, the car was worth $26000 since the car was low mileage.

The insurance company sent the cheque for $26000 to Toyota so yes.. they pay the leasing company, but Toyota sent me back a cheque for $10000. On top of that, I got all my GST and PST back from the insurance company.

So I don't agree with your first part.
I won't comment on your example because I don't think enough details are given.

Perhaps I should not have been so generalized in my reply. It becomes a grey area if you want to get detailed and even go case by case. For one, there is a large variation between provinces. Also, no two insurance companies would necessarily handle the same situation the same, so the company you are with plays a role as well. Even individual manufacturer leasing arms deal with this situation different. There are numerous factors.

In Ontario, the limited waiver of depreciation endorsement for leased cars is OPCF 43A and defined here:
http://www.fsco.gov.on.ca/ENGLISH/fo...21-11-2006.pdf

The limited waiver of depreciation endorsement is by definition Gap Insurance. BMW Leases in Canada include Gap Insurance. With this simple definition you could argue that you don't need the limited waiver of depreciation for a leased car because you are purchasing coverage twice (the cost of the Lease Gap Insurance is built into your lease payment).

However, having both creates a sticky situation in which you may actually receive some amount of payment in the event of total loss. This is certainly not the norm but is possible. My reply may have given the impression this was impossible.

There have been court cases in Ontario disputing payment for a Total Loss where gap insurance was built into the lease agreement and the lessee purchased the limited waiver of depreciation. In one example, the insurance company paid the lessor current value and paid the lessee the difference between insured value (i.e. the undepreciated amount) and the current value. The lessor sued the insurance company for the amount paid to the lessee and lost. So the end result was the person that leased received money from the insurance company and the lessor filed a claim against the Gap Insurance provided in the lease agreement to make up the difference.

Here is one example (too lazy to find others, lol):
http://www.daikynguyen.com/eet/print...Aug/03/B_7.pdf
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