If A Rented Vehicle Hit Me, Who Pays Compensation?

| Jun 16, 2021 | Car Accidents

Negligent motorists are legally and morally responsible for the wrecks they cause. But a third party is often financially responsible. For example, if owners allow incompetent dribvers to use their vehicles and these drivers cause wrecks, the negligent entrustment rule usually applies. More on that below.

However, commercial negligent entrustment cases work a bit differently. An obscure provision of federal law, the Graves Amendment, could limit the liability of Enterprise, U-Haul, and other vehicle rental companies in these situations. More on that below as well. This law is a big deal because, in many cases, people who rent vehicles have little or no insurance.

So, a Lexington personal injury attorney must work extra hard in these cases to obtain maximum compensation. Basically, a commercial rental collision is a two-part negligence case. Unless an attorney clearly establishes both parts, the victim could end up settling for less.

Elements of a Negligent Entrustment Claim

If a driver under 18 caused a crash, the negligent entrustment rule always applies. People younger than 18 cannot own property, so these individuals are always driving someone else’s car. The negligent entrustment rule usually applies if the driver is under 21. 

Furthermore, most households have “hers” and “his” vehicles. Frequently, she drives his vehicle, and vice versa. On a similar note, many roommates and friends borrow someone else’s vehicle, for various reasons.

So, the negligent entrustment rule comes up a lot in non commercial claims. As mentioned, it applies if the owner knowingly loaned a vehicle to an incompetent driver who causes a crash. Evidence of incompetency could include:

  • No drivers’ license,

  • Safety-suspended drivers’ license,

  • Driving in violation of license restrictions,

  • Recent at-fault collisions, or

  • A poor driving record.

This evidence is basically in descending order. Unlicensed drivers are usually incompetent as a matter of law, no matter how much experience they have behind the wheel. A poor driving record, in and of itself, might not prove incompetence.

Getting Around the Graves Amendment

49 U.S.C. 30106 only applies in commercial negligent entrustment cases. Here’s the story behind the Graves Amendment.

In the late 1990s and early 2000s, several juries ordered Enterprise and other such companies to pay large damage awards following catastrophic wrecks. To shield these companies from liability, Rep. Sam Graves (D-MO) added the amendment which bears his name to a large omnibus transportation bill.

Lawmakers frequently add pet policy provisions to these bills. Very few legislators were in favor of the Graves Amendment. These companies were already rich enough. But if they wanted to vote for the transportation bill, which they did, they had to also approve the Graves Amendment.

Like many policy riders, this amendment is poorly drafted and has no supporting legislative history. As a result, there are some gaping holes in the Graves Amendment which are almost big enough to drive a U-Haul truck through.

Trade or Business

Companies are immune from negligent entrustment lawsuits if they are in the trade or business of renting vehicles. As mentioned, the brief Graves Amendment does not bother to define this key phrase. 

Arguably, the closest definition is the definition of “merchant” in the Uniform Commercial Code, a reliable document which lawyers often use in contract and other commercial cases. Section 2-104 states that a merchant must have one of two qualities, neither of which apply to many vehicle rental establishments.

  • Special Knowledge: Most U-Haul and other owners have no special knowledge about the vehicles they rent. The clerk can usually tell you how to turn on the air conditioner. But the clerk usually cannot tell you the unit’s BTU capacity or any other similar information about the vehicle.

  • Deals in Kind: This phrase means the kind of goods the merchant sells or rents. A hardware store usually has a few candy bars available for sale at the checkout stand. But that offering doesn’t make the hardware store a candy store. Likewise, most U-Haul dealers are moving supply companies which happen to rent a couple of trucks as well.

If the company tries to claim Graves Amendment immunity, its lawyers have the burden of proof to establish that immunity applies. A Lexington personal injury attorney must only undermine that assertion.

Not Otherwise Negligent

Recall that it’s usually negligence as a matter of law to allow a driver without a valid license to use your motor vehicle. That usually means no license or a safety-suspended license. Administrative suspensions, such as a suspension for failure to pay child support, are in a grey area. So is a driving record which includes a prior recent safety suspension.

Here’s why this point matters in this context. In the early 2000s, there was no way to easily verify a drivers’ license. Today, this data is readily available. In fact, accepting a license without verifying it is almost like accepting a license that’s an obvious forgery.

Immunity does not apply if the owner or agent was somehow negligent during the transaction. That would include giving the keys to anyone with a valid credit card.

 

In spite of the Graves Amendment, commercial lessors are usually responsible for rented vehicle wrecks. For a free consultation with an experienced personal injury lawyer in Lexington, contact the Goode Law Office, PLLC. We routinely handle matters in Fayette County and nearby jurisdictions. #goodelawyers