ABA Family Legal Guide

Personal Injury

Negligence

Automobile Collisions

Is an automobile leasing company vicariously liable when the drivers of leased vehicles get into collisions?

Sometimes. In some states, car rental companies are liable for property damage or personal injury caused by operators of leased vehicles under state law. One state supreme court explained the rationale: " . . . to protect the safety of traffic upon highways by providing an incentive to him who rents motor vehicles to rent them to competent and careful operators by making him liable for damages resulting from the [negligent] operation of the rented vehicle." In these states, car rental companies must purchase liability insurance, and pass the cost of that insurance on to the consumer.

In other states, the car rental company is not liable for the renter's negligence. The car renter is primarily liable for damages, and must carry appropriate insurance as a condition of renting the car.