Securing damages from a rental car company following a collision can be a difficult endeavor. It’s not totally impossible, but there are a number of provisions in both state and federal law that protect these firms from liability in many cases. carcrashinsurance-300x185

This is true even though Florida considers vehicles to be a dangerous instrumentality and extends vicarious liability to most motor vehicle owners when it is then driven with permission by a negligent driver who causes an accident. State law in Florida previously allowed injured parties to hold leasing firms responsible for up to $500,000 in damages per crash, but that changed with the implementation of the federal Graves Amendment, which bars vicarious liability action on rental car companies.

The issue arose recently in a case before the Illinois Supreme Court, where plaintiff in Nelson v. Artley asserted the rental car company should be liable to pay the full amount of a default judgment following an accident caused by an uninsured motorist driving a rental car.

According to court records, a woman rented a vehicle from a vehicle leasing company, and that vehicle was subsequently reported stolen.

A short time later, that same vehicle – operated by an uninsured driver – crossed the center line of a roadway caused a traffic accident with an oncoming vehicle, resulting in the serious injuries of at least three individuals.

One of those, plaintiff, filed a lawsuit against the uninsured driver. However, being that he was uninsured, he didn’t have much to offer and never responded to a court summons. The court responded by entering a default judgment in plaintiff’s favor for $600,000. However, defendant had no means to pay that amount.

Plaintiff then brought a supplementary action against the rental car company, asserting it should be held responsible to pay the default judgment. Defendant rental car company first denied it was in possession of any property of the at-fault driver that could be used to help satisfy the judgment. It further presented three affirmative defenses:

At-fault driver was not its customer, had not been listed on the rental agreement, and was not an authorized user of the vehicle. Therefore, the company had no obligation to extend financial protection to him.
Rental car company was self-insured for a total financial responsibility of up to $100,000 under state law. Because it had already paid $50,000 to one injured party and $25,000 each to two others (including plaintiff), it had already shelled out as much as it could be required to pay.

Nothing in the rental agreement obligated the company to pay costs or postjudgment interest in connection with a default judgment.
Trial court agreed with defendant, and ruled the rental car company wasn’t responsible to pay the default judgment. Appellate court reversed, finding that while the company couldn’t be vicariously liable for the at-fault driver’s actions, it had a responsibility to pay the default judgment because it had obtained a certificate of self-insurance.

The state supreme court reversed, finding the company was limited to the minimum coverage provisions for rental firms that meet their financial responsibility obligations by buying insurance – not for the full amount of the default judgment.

If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Nelson v. Artley , Oct. 8, 2015, Illinois Supreme Court