[timmahh]

Another BMW lease I have has been deemed a total loss.

Due to the market conditions and overall lease terms, the insurance payout vs. payoff with BMW FS is rather significant.

When I called initially I was told the difference would be refunded, but today I received an email saying they may credit my account for up to 50% of the excess payment if I finance with BMW again.

Today they stated very clearly they own the car, which I understand, but BMW doesn't make the insurance payments, and the excess payment is a benefit of the insurance.

Has anyone had any success in navigating this? It's a large sum of money that they will keep merely because... they get to keep it?

[AAA]

If your insurance payout were less than the BMW payoff wouldn't you be responsible for paying the difference? If that's the case, it doesn't seem fair that BMW gets more than you owe in your case.

[timmahh]

Originally Posted by AAA

If your insurance payout were less than the BMW payoff wouldn't you be responsible for paying the difference? If that's the case, it doesn't seem fair that BMW gets more than you owe in your case.

I would agree with you, except that as part of the lease you are specifically paying for GAP insurance. So in that event, BMW isn't losing money on the vehicle. There could potentially be out of pocket expenses for the contractual obligation portion of it though.

I.e.,:
Agreed upon residual value $30k
Insurance payout $29k
GAP would cover $1k
Remaining lease payment/fees/termination costs would then be out of pocket

Maybe I am thinking of it wrong. But, in this instance, BMW is getting sales tax, registration fees, etc. None of that is related to them owning the car, those are/were out of pocket on my side.

[TurtleBoy]

They are correct and what we were just discussing last week. They are the owners and usually are entitled to all insurance proceeds. There are some insurance companies that will cut two checks, one to the lessor for the payoff and one to the lessee for the balance but that is not the norm. It also could be effected by state insurance regulations but that seems rare. They are also companies the put wording in their lease contracts to the effect that they are entitled to all insurance proceeds or the lessee is not entitled to any equity in the vehicle. BMW does neither as far as I know.
This is a good example of why it is recommend that a large down payment is not put on a lease (I'm sure you didn't do that in in case but it applies).

They are not getting paid anything for your registration, sales tax. etc. The insurance pays out for fair market value which does not include any of that. Depending on your settlement if you can someone come up with an catalo loss for those you can go after the person that hit you.

Sorry to hear you got caught up in this.

[timmahh]

Originally Posted by TurtleBoy

They are correct and what we were just discussing last week. They are the owners and usually are entitled to all insurance proceeds. There are some insurance companies that will cut two checks, one to the lessor for the payoff and one to the lessee for the balance but that is not the norm. It also could be effected by state insurance regulations but that seems rare. They are also companies the put wording in their lease contracts to the effect that they are entitled to all insurance proceeds or the lessee is not entitled to any equity in the vehicle. BMW does neither as far as I know.
This is a good example of why it is recommend that a large down payment is not put on a lease (I'm sure you didn't do that in in case but it applies).

They are not getting paid anything for your registration, sales tax. etc. The insurance pays out for fair market value which does not include any of that. Depending on your settlement if you can someone come up with an catalo loss for those you can go after the person that hit you.

Sorry to hear you got caught up in this.

Thanks TB. All good, definitely a learning experience.

In my first call with BMW FS, she said the excess would be refunded.

In my second call (post Total Loss Equity Program Email), the agent said they own the car and as such are entitled to any equity. He stated the lease contract requires BMW to be listed as the loss payee and that insurance payments are to be for ACV to BMW. BMW apparently has the right to sign the check on your behalf as the lease holder if you are also listed on the payment.

The insurance company then sent a breakdown showing sales tax, DMV fees, etc., which to me BMW should not get.

So, in my third call to BMW, the agent said they aren't expecting anything except ACV - Deductible. Then, remaining equity, up to 50% may be applied to my BMW FS account if I obtain a vehicle via BMW FS again (which obviously I am 99.9999% going to to).

It's certainly better than getting nothing at all, but still a bit of a surprise that they operate this way.

[TurtleBoy]

Originally Posted by timmahh

Thanks TB. All good, definitely a learning experience.

In my first call with BMW FS, she said the excess would be refunded.

In my second call (post Total Loss Equity Program Email), the agent said they own the car and as such are entitled to any equity. He stated the lease contract requires BMW to be listed as the loss payee and that insurance payments are to be for ACV to BMW. BMW apparently has the right to sign the check on your behalf as the lease holder if you are also listed on the payment.

The insurance company then sent a breakdown showing sales tax, DMV fees, etc., which to me BMW should not get.

So, in my third call to BMW, the agent said they aren't expecting anything except ACV - Deductible. Then, remaining equity, up to 50% may be applied to my BMW FS account if I obtain a vehicle via BMW FS again (which obviously I am 99.9999% going to to).

It's certainly better than getting nothing at all, but still a bit of a surprise that they operate this way.

I would talk to the insurance company, it is nice of them to include the extra but if it doesn't go to you it does no good. Hopefully they didn't cut the check yet and they can carve out that part and send it directly to you.

[timmahh]

Originally Posted by TurtleBoy

I would talk to the insurance company, it is nice of them to include the extra but if it doesn't go to you it does no good. Hopefully they didn't cut the check yet and they can carve out that part and send it directly to you.

I don't think it's progressed that far thankfully, and the insurance co agrees that what I said makes sense. But, they need a demand statement more or less. Right now this is the breakdown they shared with us as the policy holder, but BMW will basically take any check amount and not provide anything back outside of their 50% total loss equity program.

BMW FS itself isn't even handling the process, it's done by a third party who thus far has generically said ACV. The adjuster is going to call the third party vendor to get a confirmation of exactly what they are looking for. If it's ACV - Deductible, that check is payable to BMW FS. Then, the remaining items will be paid directly to me.

Hopefully my equity loss will provide enough profit for BMW to delay $18 per month heated seats for a few months

[TurtleBoy]

Originally Posted by timmahh

I don't think it's progressed that far thankfully, and the insurance co agrees that what I said makes sense. But, they need a demand statement more or less. Right now this is the breakdown they shared with us as the policy holder, but BMW will basically take any check amount and not provide anything back outside of their 50% total loss equity program.

BMW FS itself isn't even handling the process, it's done by a third party who thus far has generically said ACV. The adjuster is going to call the third party vendor to get a confirmation of exactly what they are looking for. If it's ACV - Deductible, that check is payable to BMW FS. Then, the remaining items will be paid directly to me.

Hopefully my equity loss will provide enough profit for BMW to delay $18 per month heated seats for a few months

Good luck and let us know how it turns out.

[calbears]

Originally Posted by timmahh

I don't think it's progressed that far thankfully, and the insurance co agrees that what I said makes sense. But, they need a demand statement more or less. Right now this is the breakdown they shared with us as the policy holder, but BMW will basically take any check amount and not provide anything back outside of their 50% total loss equity program.

BMW FS itself isn't even handling the process, it's done by a third party who thus far has generically said ACV. The adjuster is going to call the third party vendor to get a confirmation of exactly what they are looking for. If it's ACV - Deductible, that check is payable to BMW FS. Then, the remaining items will be paid directly to me.

Hopefully my equity loss will provide enough profit for BMW to delay $18 per month heated seats for a few months

My experience back in 2019 was different. My insurance paid off BMW residual + remaining payments and the difference went to me

[jiggie]

This was the exact nightmare scenario as of to why a bunch of folks months ago bought out their Leases, the cars were just worth too much lately. Good luck!

[timmahh]

Originally Posted by calbears

My experience back in 2019 was different. My insurance paid off BMW residual + remaining payments and the difference went to me

Originally Posted by jiggie

This was the exact nightmare scenario as of to why a bunch of folks months ago bought out their Leases, the cars were just worth too much lately. Good luck!

I suspect this has likely changed as of recent too, this lease was initiated during the craze in 2021. BMW implemented lease changes (i.e. not accepting third party payoffs if I recall) and it seems, likely capitalizing on the used car market values. They were very specific in my conversation that a total loss payout from insurance is not the same as a lease-holder-buyout.

[eelnoraa]

Originally Posted by AAA

If your insurance payout were less than the BMW payoff wouldn't you be responsible for paying the difference? If that's the case, it doesn't seem fair that BMW gets more than you owe in your case.

I believe when you lease a BMW, the GAP insurance is handle by BMWFS. This means if you put zero down, and total the car on day 1, the GAP will cover what you own - what the your insurance payout. But I could be wrong.

GAP, and OP's situation is exactly why we should put $0 toward downpayment at lease

[TurtleBoy]

Originally Posted by eelnoraa

I believe when you lease a BMW, the GAP insurance is handle by BMWFS. This means if you put zero down, and total the car on day 1, the GAP will cover what you own - what the your insurance payout. But I could be wrong.

GAP, and OP's situation is exactly why we should put $0 toward downpayment at lease

You are correct, GAP insurance is included with a BMWFS lease.

[Henry2020]

You’re basically renting a car with an option to buy it. I think that it depends on your state, but the option to buy may not be enough to get you the equity. Some people have even tried to buy out their leases immediately after an accident but I’ve heard about instances where BMWFS found out about the accident and returned the check. There are lawsuits about this. You should be able to find more info online.

[ArcticBlueM440i]

Bumping this...
After speaking with my insurance and BMWFS this is how I understand it:
My total insured amount is greater than the "Market value", which is greater than lease payoff.
My insurance will cut me a check for total insured minus Market value. Insurance will pay BMW Market value. BMW will credit me Market value - lease payoff towards my next lease.
The only thing that is unclear is how, if at all, MSDs factor into this. The person at BMWFS indicated that the refund of MSDs could reduce my credit, but I'm not sure why that would be, and he was unclear how the math would work. Anyone dealt with this?

[Brendan///M]

Originally Posted by ArcticBlueM440i

Bumping this...
After speaking with my insurance and BMWFS this is how I understand it:
My total insured amount is greater than the "Market value", which is greater than lease payoff.
My insurance will cut me a check for total insured minus Market value. Insurance will pay BMW Market value. BMW will credit me Market value - lease payoff towards my next lease.
The only thing that is unclear is how, if at all, MSDs factor into this. The person at BMWFS indicated that the refund of MSDs could reduce my credit, but I'm not sure why that would be, and he was unclear how the math would work. Anyone dealt with this?

Did they end up crediting you 50% of whatever was left, or the entire amount, towards your next lease? Looking for info on this online and can’t find anything beyond this thread. Going to be in the same situation myself, next week. I just downloaded payoff documents but I think people have said that option will likely fail when they find out about the total loss. If I have the entire remainder credited for my next lease, I’ll be ecstatic. Even 50% is better than nothing I guess.

[TurtleBoy]

Originally Posted by Brendan///M

Did they end up crediting you 50% of whatever was left, or the entire amount, towards your next lease? Looking for info on this online and can’t find anything beyond this thread. Going to be in the same situation myself, next week. I just downloaded payoff documents but I think people have said that option will likely fail when they find out about the total loss. If I have the entire remainder credited for my next lease, I’ll be ecstatic. Even 50% is better than nothing I guess.

BMW will keep all of the insurance proceeds. The only way to get any equity would be to have your insurance company write a check for the payoff to BMW and the balance to you.

[Brendan///M]

Originally Posted by TurtleBoy

BMW will keep all of the insurance proceeds. The only way to get any equity would be to have your insurance company write a check for the payoff to BMW and the balance to you.

Ugh. Will see if they are willing to do this now that I have the payoff documents valid for the next month or so. So the OP and other poster here are misinformed with regard to BMWFS issuing an account credit towards next car?

[TurtleBoy]

Originally Posted by Brendan///M

Ugh. Will see if they are willing to do this now that I have the payoff documents valid for the next month or so. So the OP and other poster here are misinformed with regard to BMWFS issuing an account credit towards next car?

Yes, look a few posts down and he talked to another person and they said they will be keeping all of the equity. Many manufactures have clauses in their lease that says they are entitled to all insurance proceeds even if the amount is greater than the balance. I have not seen the contract but saw some posts saying BMW changed their contract to have something similar.

Whether you get any equity is going to come down to your insurance company, your contract, any applicable state laws and how hard you push it. It makes sense, they own the vehicle so it should be their equity.

[M3inM3]

I will add my recent experience here. I leased a 2021 X3 that got totaled due to a fender bender that ripped the part of the frame that the crossmember attaches to at the front. My lease payoff was $31K, the insurance calculated the market value to be $42K. I told my insurance (Geico) to pay $31K to BMW and send the remainder to me. Since BMW is the owner of the vehicle, they need to be made aware that the car is totaled, and BMW demands from the insurance all of the market analysis. There was no way around it. BMW demanded all $42K from the insurance and I didn't see a penny from them. I could have paid off the car before the car was deemed totaled but everything happened so quickly. BMW later sent me an email saying I could get 50% of the remaining $11K if I leased or bought another BMW within a year, as long my name is on the contract, and if I finance more than 2x the amount of the 50%. Just before the year lapsed, I got a G05 X5 50e. The promised amount gets credited to your bill in one single payment.

[TurtleBoy]

Originally Posted by M3inM3

I will add my recent experience here. I leased a 2021 X3 that got totaled due to a fender bender that ripped the part of the frame that the crossmember attaches to at the front. My lease payoff was $31K, the insurance calculated the market value to be $42K. I told my insurance (Geico) to pay $31K to BMW and send the remainder to me. Since BMW is the owner of the vehicle, they need to be made aware that the car is totaled, and BMW demands from the insurance all of the market analysis. There was no way around it. BMW demanded all $42K from the insurance and I didn't see a penny from them. I could have paid off the car before the car was deemed totaled but everything happened so quickly. BMW later sent me an email saying I could get 50% of the remaining $11K if I leased or bought another BMW within a year, as long my name is on the contract, and if I finance more than 2x the amount of the 50%. Just before the year lapsed, I got a G05 X5 50e. The promised amount gets credited to your bill in one single payment.

Excellent, thanks for providing that information. I can see them using some of the equity as a sales incentive rather than just giving it back at time of settlement.

[Brendan///M]

For what it’s worth, I called BMWFS and spoke to the total loss department. They are saying I will get 100% of the overage towards my next car, but I’ll only believe it when I see it. I’ll report back. Only expecting to get 50% at this point, unless something has changed recently.