Getting a Maximum Recovery after Your Auto Accident; Keeping Car Rental Owners Responsible


New York, along with many other states, has a vicarious liability law which makes the vehicle owner liable for the accidents of the operator.  This law has been gutted in favor car rental and leasing companies who have been able to carve an exception.  Trial lawyers in New York and other states are seeking to restore the old law.

The rule of vicarious liability in automobile accidents makes the owner liable as if he were operating the car himself when the operator is not the owner.  The owner has the same liabiliy as the operator.  For example, if I own a car and if I let my son drive it and my son has an accident, the injured parties can seek recovery against both the operator (the son) and the owner (me).

This has been a fundamental element of New York law which is found in the Vehicle and Trafflic Law (“VTL”).   The legislature mandated vicarious liability in that the owner would have the responsibility to have insurance.  One of the consequences of the privilege of car ownership is to have the fiancial responsibility if there is an accident.  Also, the owner should be liable where his automobile is loaned or given to other operators.  The owner is in a better financial position to cover the damages where the driver himself could not make good on the uninsured balance.  The is very important where a vehicle is rented or leased.

This fundamental rule was abolished by an act of Congress, the Graves Amendment, 49 USC 30106, which became effective on August 10, 2005.  The Graves Amendment abolished the rule of vicarious liability as pertaining to car rental agencies and car leasing companies, such as Hertz, Avis, and Enterprise.  The rule was abolished for all lawsuits started after that date.

The Graves Amendment has immunized car rental companies.  The car rental agency, as the owner of the vehicle, is no longer responsible for a motor vehicle accident caused by the driver!  Prior to the Graves Amendment, the car rental agency, especially the national ones (e.g., Hertz, Avis, Thrifty, etc.), would have full and high exposure coverage for an accident.  This was critical in catasptrophic injury cases.   Now, the car rental agencies only provide the minimum New York insurance limits of 25,000/50,000.

The Graves Amendment passed from tremendous pressure from the car rental and car leasing industry.   In essence, the car rental-leasing industry claimed that they, as the owners, had no control over the actions of the operators.  Once the car is rented, the car is out of the owner’s hands.  This is true, however, that is the case in every instance where the owner lets someone else take the wheel.  Remember, the initial example of the father lending the car to the son?

The New York State Trial Lawyers Association (www.nystla.org) had been able to resist the change to the vicarious liability rule in 2004 and 2005.  Ironically, the auto rental industry was able to acheive in the Congress what it could not do in the New York legislature and some other state legislatures.

New York lawyers are contesting the Graves Amendment in the courts.  So are Florida attorneys in their state. 

The car rental-leasing industry won the first few rounds.  Let’s see how the fight ends. 

If you have been injured in an automobile accident please call me at 800-581-1434 or write to letters@seitelman.com.

Mark E. Seitelman, 6/30/08, www.seitelman.com

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8 Responses to Getting a Maximum Recovery after Your Auto Accident; Keeping Car Rental Owners Responsible

  1. Assman says:

    Why should car rental companies – which have absolutely NO control over their customers – bear unlimited responsibility for the torts of their renters?

  2. markseitelman says:

    Thank you for the comment.

    Car rental companies should be responsible.

    Generally car renters have questionable financial resources. Also, car renters tend to be careless with the rental car. For example, often the car rental agreement calls for the renter to be the sole driver, however, the renter will let someone else drive the car.

    By holding the car rental company responsible there will be adequate insurance in the event of very serious injuries.

    As things stand now, Hertz Rent-A-Car, only provides $25,000/50,000 coverage in a New York accident. This is a windfall to the car rental industry.

  3. […] a finding of vicarious liability against a car rental or leasing company.  See our prior posts here and […]

  4. I am off to Costa Rica for few days. Is it advisable to rent a car or just take the shuttle to hotel? I’d be waiting for your response.

  5. Before you drive away from the pickup station, inspect the car carefully for body damage. Be sure the lights and turn signals are working properly, and check the mileage odometer. Report any defects at once.

  6. Roger Martin says:

    I am a victim of a rental car driver in Florida.

    How can I assist in the repeal of this law?

    Has the price of rental cars dropped due to the enactment of this law?

    This is obviously a political favor by Sam Graves of MO to his insurance PAC in the guise of reducing cost to consumers.

    • Yes, this is unfortunate law.

      Since this is a federal law, the American Association of Justice (www.justice.org) is handling this. Essentially, this is being fought in the courts, state by state, court by court. You can check-in with AAJ to see where we are in the fight.

      Good luck.

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