Safety Law Allow Rental Car Companies to Escape Responsibility
Have you ever heard of the “Graves amendment?” Most people probably haven’t, so don’t feel bad that you are not aware of it. You know when you will be made aware of it? When you are in bad car accident and injured and find out that the person who hit you was driving a rental car. Do you think the driver is responsible? What about the rental car company itself? What happens if the driver had no insurance on the car?
Victims of car accidents caused by uninsured or underinsured motorists driving rental cars have no remedy for their injuries under the Safe, Accountable, Flexible, and Efficient Transportation Equity Act. This law contains a provision known as the “Graves Amendment,” 49 U.S.C. sec. 30106. This law calls for preemption and abolition of any state statute or common law rules that previously held rental car companies or leasing agents vicariously liable for their rental car driver’s acts of negligence, except in situations where the owner itself was negligent or engaged in criminal wrongdoing.
The Graves Amendment provides in relevant part that,
“An owner of a motor vehicle that rents or leases the vehicle to a person (or
affiliate of the owner) shall not be liable under the law of any State or
political subdivision thereof, by reason of being the owner of the vehicle
(or an affiliate of the owner), for harm to persons or property that results
out of the use, operation, or possession of the vehicle during the period of
the rental or lease, if
(1) the owner (or an affiliate of the owner) is engaged in the trade or
business of renting or leasing motor vehicles; and
(2) there is no negligence or criminal wrongdoing on the part of the owner
(or an affiliate of the owner).
The Graves Amendment does include the following savings clause in section
“Financial Responsibility Laws.” Nothing in this section supersedes the
law of any State or political subdivision thereof- (1) imposing financial
responsibility or insurance standards on the owner of a motor vehicle for
the privilege of registering and operating a motor vehicle; or (2) imposing
liability on business entities engaged in the trade or business of renting
or leasing motor vehicles for failure to meet the financial responsibility
or liability insurance requirements under State law.”
The Graves Amendment was passed by Congress without making any official findings. The law is named after Missouri Representative Sam Graves. Graves advocated that rental costs were increasing for consumers as a result of rental car owners being held vicariously liable for the negligence of their drivers. Under the Graves Amendment, there is no provision that requires uninsured drivers to purchase auto insurance from rental companies. It is not uncommon for rental car companies to rent vehicles to uninsured motorists.
So, if you are ever renting a car for your own business, make sure you have your own auto insurance in place, or take out the insurance that is offered. If you are involved in an accident caused by a driver in a rental car, hope and pray that they have their own insurance to cover your injuries and damages, because under the Graves Amendment, the rental car company or the leasing agent, under Federal law, are exempt and immune from your suing them directly, except with limited exceptions as pointed out above.