The Graves Amendment, and Rental Car Liability

By LawrenceGarcia

Imagine being hit in the crosswalk in an unfamiliar rental car by a tourist. This would result in several broken bones and torn ligaments and years of expensive and painful physical therapy. You would typically settle any injury claims with the driver’s insurance policy, or by filing a lawsuit against him. However, in certain states that allow such claims against motor vehicle owners, you could also file a claim against the rental car company for damages before 2005.

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The so-called Graves Amendment (49 U.S.C. SS 30106 was passed in 2005 and effectively eliminated vicarious liability claims against rental cars companies. This federal law is discussed and how it impacts rental car liability.

A Glance at the Graves Amendment

The Graves Amendment was included in a 2005 federal highway bill. This bans car rental companies from claiming vicarious liability for injuries suffered by customers unless negligence or other actions are proven to have contributed to the injury. The following is federal law:

If the motor vehicle’s owner rents or leases it to another person or an affiliate, the law of that State or political subdivision of that State does not apply to him. He is not liable for any harm that may result from the operation, possession, or use of the vehicle.

The trade or business of renting out or leasing motor vehicles is carried on by the owner or an affiliate.

The owner or an affiliate is not guilty of negligence or criminal wrongdoing.

The Graves Amendment preempts state laws regarding liability because most rental cars cross state borders (or operate in more than one state) and engage in interstate commerce. It has also been applied in state courts to protect rental companies of tractors, trailers and other vehicles from vicarious responsibility. It has also been determined that it applies to carsharing services such as Zipcar. It’s not yet clear if this extends to loaner arrangements with auto dealers.

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A Brief History of Rental Car Liability, and the Graves Amendment

In response to growing vicarious liability laws in states that did not provide an exception for car rentals, the Graves Amendment was created. New York was one of the states that had no limits on vicarious liabilities. This led to unsustainable large settlements against plaintiffs. In a vicarious negligence claim against Budget Rent-a-Car, $21 million was awarded to a New York pedestrian who was paralysed in an accident involving a Budget Rent-a-Car. Budget was ultimately liable for the damages he sustained even though the driver that hit him ran a red light. The driver had no insurance.

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Rep. Sam Graves, a Missouri Republican, is the author of the amendment. Vicarious liability is estimated to have an annual cost of $100 million more in rental fees for consumers each year. Opponents were concerned that victims wouldn’t have recourse if they were struck by uninsured motorists while renting cars. The amendment was approved by a narrow margin.

What the Graves Amendment means for you

Car rental companies had been drafting contract language to release them from vicarious responsibility before the amendment was passed. This allowed them to offer temporary rental insurance to those who otherwise would not have coverage. You, either personally or through your insurer, are generally liable for any injuries that are caused by rental cars.

However, if the injury was caused by negligence (e.g. dangerously worn brakes), then the victim can file a claim against car rental companies. The rental company is also liable for injuries caused by criminal activity. Negligence claims against rental companies typically include negligent entrustment and negligent maintenance.

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Are you involved in a rental car accident? Get Legal Help Today

You need to be familiar with the law and follow the correct procedures, no matter what type of accident it was. Talk to an injury lawyer if you are unsure who is responsible for your injuries, or how to start a claim.