What is the Graves Amendment?

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The Graves Amendment is a lesser known law that those wishing to rent a car often overlook. This is a mistake! This article will explain why every driver should be aware of this law prior to renting a car.

Before 2005, if a driver became injured by someone driving a rental car, they would more than likely settle their claim by filing a claim with the driver of the rental car’s own car insurance carrier. In some instances a driver may have had grounds to sue the at-fault driver in court (for injuries as well as pain and suffering). Providing, the injured party was not at-fault. Fault is generally determinable at the scene of the accident barring certain circumstances such as if the accident is a hit and run, and incidents where a driver is unable to communicate with law enforcement.

A brief history of the Graves Amendment

The amendment itself was authored by Rep. Sam Graves of Missouri. His proposal came in response to the fact that by 2005, vicarious liability was costing consumers in the United States an estimated $100,000,000 in rental car fees on an annual basis. Opponents of this bill began to voice concerns that car accident victims would be left with very little recourse after finding themselves in an accident with a driver who wasn’t holding UIM coverage. However, the amendment passed by a fine margin.

What is the amendment’s relationship to “vicarious liability”?

On top of all of this, prior to 2005 drivers were also able to include the rental car company in litigation in order to recover further damages. However, changes to the law were first made in 2005, when the United States officially imposed the Graves Amendment. The Graves Amendment mostly did away with the ability to file a claim directly against the rental car company for “vicarious liability”. The principle of vicarious liability relates to another principle that’s been discussed at-length in previous articles: Respondeat Superior.

What is vicarious liability? The law defines vicarious liability as follows:

“[…]Liability that a supervisory party (such as an employer) bears for the actionable conduct of a subordinate or associate (such as an employee) based on the relationship between the two parties.”

What does rental car liability mean for litigation?

At first, states began passing laws with vicarious liability, lacking the exception for rental car companies. The amendment was enacted to enforce a clearer determination of who can file a lawsuit. The amendment also includes the amount of damages those bringing litigation are entitled to. New York in particular, according to FindLaw.com has no statutory limits on vicarious liability whatsoever. This problem began leading to alarmingly high settlements.

The example provided by FindLaw offers a case of a pedestrian in New York becoming paralyzed 2000. The precedent states the victim was awarded $21,000,000 through a vicarious liability claim brought against the rental car company. The driver whose fault it was the victim became paralyzed was guilty of running a red light. However, the rental car company found themselves responsible for the settlement due to the at-fault driver’s lack of insurance.

What does the Graves Amendment mean for drivers?

Prior to the amendment, rental car companies included language explaining the renter was waiving their right to hold them responsible for vicarious liability. Today, companies offer separate rental car insurance policies for drivers that lack UIM upon renting a car. Due to this practice, a driver is liable for accidents or injuries during the use of the rental car.

It is always recommended drivers take any insurance being offered. It’s a smart idea to accept the option regardless of whether the driver is already carrying insurance.  The risk of declining offered rental car insurance is not worth the potential cost of an accident.

However, if the accident is the result of the company’s negligence (faulty brakes), this can become the cause of an accident resulting in injuries or wrongful death. In these situations, the victim has the right to bring a lawsuit against the rental car company. This is when a victim requires a Board Certified Personal Injury lawyer to take their case.

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