Rented Vehicles And Car Crashes

Under normal third-party liability theories like respondeat superior (where an employer is responsible for the employee’s driving), and negligent entrustment (where the owner is responsible for his driver’s driving), you would expect that Avis, Enterprise, U-Haul, and other vehicle rental companies would be responsible for damages if they lease a vehicle to a tortfeasor (negligent driver) who later causes a car crash. But that’s not the case. If you rent a car and you cause a collision, your car insurance is on the line.

The story behind the Graves Amendment actually began in the northeast. After a jury gave a verdict holding a rental car company to pay several million dollars in damages after a tortfeasor (negligent driver) caused a deadly crash in a rented vehicle, the company threated to pull out of several states. In response, lawmakers hastily added 49 U.S. Code § 30106 to an omnibus spending bill. Like almost all such measures, there is basically no legislative history about the Graves Amendment other than a few minutes of floor debate.

It’s important to know what the Graves Amendment does and does not say, because many people in Atlanta rent large moving trucks that normally require commercial drivers’ licenses to operate and some people in rented passenger cars are focused on following GPS directions on their cellphones as opposed to watching the road.

What the Graves Amendment Does

Republican Congressman Sam Graves of Missouri authored the provision which purports to eliminate liability for car rental companies if they rent a vehicle to a person that subsequently causes a car crash. There are two very big conditions, because the owner or agent:

  • Must be “engaged in the trade or business of renting or leasing motor vehicles,” and
  • Cannot be otherwise negligent.

Because it was a last-minute add-on, 49 U.S. Code § 30106 is not particularly well-drafted and does not define “trade or business,” but in the ordinary sense of the phrase, it means that the company must receive most or all its income from vehicle rental.

As for the “otherwise negligent” prong, technology has advanced a lot since Congress passed the Graves Amendment in 2005. Back then, there was basically no way for store clerks to verify drivers’ licenses beyond a visual inspection. Now, such checks are arguably the industry standard, and violation of such a standard usually constitutes negligence.

Despite the Graves Amendment, vehicle rental companies may still be liable for car crash damages as responsible third parties. A rental company like a U-Haul or Ryder can still be responsible and liable in some situations. For a free consultation with an aggressive personal injury attorney in Atlanta, contact our personal injury lawyers at Butler Law Firm.