Personal Injury Liability: Car Rental Agencies

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 What is a Rental Car Agency?

A rental car agency, also known as a rental car company, is a business that rents out vehicles for short periods of time. This usually ranges from a few days to a few weeks.

There are many reasons an individual may need to rent a car from a rental agency. These may include:

  • Needing a larger vehicle for a family trip;
  • Needing a vehicle for travel after flying to a location; or
  • Needing a vehicle while another vehicle is being repaired.

It is important to note that many rental agencies will not rent vehicles to individuals under the age of 25. These types of companies often have multiple branches, allowing an individual to rent in one location and return in another. They are also often located in or around an airport.

What Happens When a Rental Car is Involved In an Accident?

When an automobile accident occurs involving a rental car, the potential exists for more parties to become involved in a lawsuit to collect damages. Rental companies often offer additional insurance that claims the driver will not owe damages in the event of an accident.

However, the coverage as well as who pays for damages in the event of an accident involving a rental car depends on the jurisdiction in which the accident occurred. For example, in California, even if an individual purchased additional rental car insurance, their insurance would be the primary and the rental car company insurance would be the secondary.

Can a Car Rental Agency be Liable for Personal Injuries Stemming from a Customer’s Use of their Cars?

A car rental agency may be liable for personal injuries stemming from a customer’s use of one of their vehicles. Although the car rental agency cannot be held liable for personal injuries simply because they own the vehicle, they may be held liable under the legal theory of negligent entrustment.

In other words, if the rental agency rents a car to an individual whom they know is unfit to drive a vehicle, they may be liable for any injuries caused by that driver.

What Types of Actions Constitute Negligent Entrustment?

Negligent entrustment may occur when a car rental agency rents a vehicle to an individual who is unfit to operate the vehicle, such as:

  • An individual who is visibly intoxicated;
  • An individual who is likely to drink and drive;
  • An underage minor;
  • An individual with a driving record indicating reckless, unskilled, or careless driving;
  • An unlicensed driver;
  • An individual who shoes intent to use the vehicle for criminal activity; or
  • An individual who has previously rented a vehicle from the agency and has caused an accident or harm to another while operating the vehicle.

It is important to note that in some jurisdictions, renting a vehicle to an unlicensed driver is considered negligence per se. In other words, if the rental agency rents a vehicle to an unlicensed driver, they are automatically considered negligence, regardless of how safe the driver appears.

What Else Must Be Shown to Hold a Rental Agency Liable for Negligent Entrustment?

In order to hold a rental agency liable for negligent entrustment, it must be shown that the agency’s negligence caused the injury. This is in addition to the fact that the car rental agency was negligent.

For example, suppose Agency A rents a vehicle to underaged Driver Y. Driver Y, in the course of driving, crashes into Driver Z at a red light. Driver Z may be able to sue Agency A for any injuries if Driver Z can show that the crash happened because Driver Y was inexperienced and unaware of what yield to a car making a left turn meant. In this instance, the crash occurred because Agency A rented a vehicle to an underaged driver.

On the other hand, if the accident occurred because Driver Z ran the red light, Agency A would not be held liable. In this case, Driver Z’s bad driving caused the accident, not Agency A’s decision to rent a vehicle to Driver Y. Although Agency A was still negligent in renting the vehicle to Driver Y, that decision had no effect on Driver Z’s unreasonable driving.

Can the Rental Company Refuse to Rent a Car to Someone?

Yes, a rental car company may refuse to rent a vehicle to some individuals. These may include:

  • A driver without a credit or debit card. Most rental car agencies require a major credit card or debit card as a deposit when an individual rents a car;
  • A driver under the age of 21. Some rental car agencies will refuse to rent to a driver under the age of 25. Others companies may charge extra for renting to a younger driver; or
  • A driver with a bad driving record. The majority of rental car companies will refuse to rent a car to bad drivers. This includes drivers with serious offenses, such as drunk driving, on their driving record.

Should I Purchase Rental Car Insurance?

A car rental company may offer its customers different types of supplemental insurance. Most states do not require an individual to accept supplemental insurance because many car renters already have the coverage in their personal policies. The three most common types of supplemental insurance include:

  • A Collision Damage Waiver (CDW), which is a waiver of all or part of the cost if the rental car is damaged or stolen;
  • Supplemental Liability Protection (SLP), which is used to protect the driver from lawsuits by victims of accidents involving the rental car or
  • Personal Accident Insurance (PAI), which provides medical, ambulance or death benefits for the renter and passengers of the rental car.

If an individual is an insured driver, they most likely do not need to purchase any additional insurance from the car rental agency. Car rental may be covered under one of the following:

  • Personal car insurance;
  • Personal home insurance;
  • Personal credits cards;
  • Employer’s car insurance, if an individual is renting the car for business purposes; or
  • An automobile club membership, such as AAA.

Insurance offered by a car rental company often has so many loopholes, it does not offer a driver adequate additional protection. Drivers have often discovered that they are liable for certain damages even after they have purchased the car rental company’s additional insurance.

What If I Get into an Accident Driving a Rental Car?

If an individual gets into an accident while driving a rental car, they should take the following steps:

  • Notify the rental company;
  • Determine what additional steps to take with the rental company, depending on if additional insurance was purchased;
  • If the individual declined the rental company’s CDW, they will need to notify their insurance company or their credit card company that a claim will need to be made.

Depending on the policies of the rental company and the circumstances of the accident, the rental company may deny the individual a replacement vehicle. When the individual returns to the car rental office, they should obtain:

  • A copy of the accident report, claim documents, or repair estimate;
  • A copy of the rental agreement; and
  • Photos of the damaged vehicle.

Can a Lawyer Help Me with my Rental Car Agency Liability Issue?

Yes, it is essential to have the help of an experienced personal injury attorney for any rental car agency liability issues. If you are injured in a crash involving a rental car, you should contact an attorney as soon as possible to determine if you have a claim against the rental agency.

A lawyer can review your case, determine whether you have a claim, and represent you during any court proceedings, if necessary. In some cases, your attorney may be able to assist you in reaching a settlement with the rental agency and avoid appearing in court.

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