Since the Graves Amendment was enacted into federal law, rental car companies have been able to evade any vicarious liability for the negligent actions of their drivers. That means if you’re injured by someone driving a rental car, you can’t hold the owner of the vehicle responsible (as you normally would be able to under Florida law) unless the company was in some way directly liable for the accident.
What’s perhaps even more troubling is that there is no federal requirement mandating that vehicle renters purchase liability coverage on that vehicle. In fact, it isn’t uncommon for rental car companies to rent out their fleet to motorists who are not insured.
This means those injured by uninsured renters may find themselves with little recourse – unless they have uninsured/ underinsured motorist coverage. This was the scenario in the recent case of Martin v. Powers, weighed by the Tennessee Supreme Court. Here, plaintiff was battling his UM/UIM carrier because the company refused to find a rental vehicle “uninsured/ underinsured” for purposes of the policy. True, the vehicle was owned by a large, wealthy company. The problem was the only insurance to which plaintiff was entitled was a $25,000 liability policy maintained by the allegedly drunk driver – and that company wouldn’t pay either because it asserted the injury was intentionally inflicted.
According to court records, plaintiff owned a bar and in July 2012, refused to serve alcohol to the defendant, because he appeared to be intoxicated. He asked defendant to leave the premises. He then followed defendant outside and watched him walk through the parking lot and get into the driver’s seat of a rented Kia Sorento. Defendant then drove the vehicle toward plaintiff, striking him in the knee.
At the time, plaintiff was insured by a UM/UIM policy that carried $250,000 in damages per person and up to $500,000 per accident.
Plaintiff sought to collect on that policy, but the insurer declined to pay it, asserting the vehicle was not uninsured. Trial court granted defense motion for summary judgment, finding the vehicle didn’t fit the definition of an “uninsured vehicle” per the UM/UIM policy language.
The question is whether the risk of a crash is undertaken by the insurance company. If it is not, then the vehicle is not insured.
So our accident attorneys understand in this case, defendant was not insured because his own insurance company refused to undertake the risk for his intentionally harming someone while driving.
Similarly, the rental car company – and its insurer – did not assume the risk of the negligent actions of the customer/ driver. Whether a company has insurance or assets doesn’t matter if it hasn’t actually assumed the risk of liability. Because the Graves Amendment preempts any vicarious liability on the part of the rental car company for the negligence of its customers, it did not assume the risk of a crash; in fact, it was statutorily immune from that risk.
That’s good news for the plaintiff in this case because with the vehicle legally considered “uninsured,” he can now move forward with his claim for UM/ UIM benefits.
If you have been injured in an accident, contact the Hollander Law Firm at 888-751-7777 for a free and confidential consultation. There is no fee unless we win.
Martin v. Powers, Feb. 10, 2016, Tennessee Supreme Court
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