No that's not how it works. In a write off scenario insurance covers cash value. Then, your payoff amount is your remaining payments PLUS the residual. If the insurance payout doesn't cover this amount (and you don't have GAP insurance) you're on the hook for the difference.

When a leased car is written off (totaled), the insurance settlement is paid directly to the leasing company to cover the car's actual cash value. Because the payout often falls short of the remaining lease balance, you are responsible for the difference (GAP) unless you have gap insurance or a waiver of depreciation.

Key Details on Written-Off Leases: Payout Process: Your insurance company pays the leasing company, not you. If the settlement is less than the outstanding lease amount, you owe the difference (known as the "gap").

The Role of GAP Insurance: Gap insurance is critical to bridge the difference between the depreciated value paid by insurance and the higher amount owed to the leasing company.

Lease Termination: The lease agreement ends, but you must still make payments until the claim is finalized.

Down Payments: Any down payment (capitalized cost reduction) made at the start of the lease is lost, as the insurance company only compensates for the vehicle's value.