Liability Insurance on Rental Cars

One significant change during 2011 to Florida’s motor vehicle insurance law is the adjustment in the law regarding the liability of car rental companies. Until recently, car rental companies were vicariously liable for accidents caused by their drivers under Florida’s Dangerous Instrumentality Doctrine. This Doctrine stated that the operation of a motor vehicle is inherently dangerous and that the owner of a vehicle is liable for the actions of other drivers who the owner allows to use that vehicle.

This applied to car rental companies who owned the vehicle and gave permission to renters to drive the cars in the company’s fleet. As a result, car rental companies had to carry a mandatory amount of liability insurance to cover potential accidents. Those injured in an accident with a rental car could look to that coverage in order to recover for their damages. Due to the amount of tourists and rental cars that are driven on our roads in Florida each year, the Florida legislature sought to protect its citizens with this law and this law was unique to Florida.

Meanwhile, the car rental companies were lobbying at the Federal level for the Graves Amendment and the Amendment was instituted into law. The Graves Amendment states that a rental car company will not be held liable for the tortious actions of the driver of a car that the company owns, rents to an individual, regardless of whether the driver is an insured motorist, so long as the rental car company is not negligent or guilty of criminal wrongdoing. This law is in direct conflict with Florida’s Dangerous Instrumentality Doctrine and in 2011 it was up the Florida Supreme Court to decide which law would control in Florida. Ultimately, the Florida Supreme Court ruled that the Graves Amendment would be the law in Florida. The Court said that Federal law trumped Florida law in this area; meaning car rental companies are no longer liable for accidents caused by drivers using their rental cars, unless the car rental company was negligent in renting to that individual.

As it stands now, this seems to be a tough break for Florida drivers who can no longer rely on rental car companies having liability insurance in place. Instead, Florida drivers have even more reason to add some type of uninsured motorists coverage to their policies as there will most likely be less liability coverage on rental vehicles that may cause accidents here in Florida.