I am considered an expert in car rental related matters and often act as an expert witness in legal cases involving the car rental industry. Accidents involving rental cars are common, but since the passage of the Graves Amendment, the rental company is usually not liable for the actions of its customers. The most common exceptions are product liability and negligent entrustment. Click here for a good explanation of the Graves Amendment. Negligent entrustment occurs when a vehicle is entrusted to an individual that should not have been allowed to have the vehicle.
How do you, as a vehicle rental owner or operator, eliminate or reduce exposure to negligent entrustment lawsuits? By being careful to do two things.
First, have well documented procedures for qualifying renters. The possession of a facially valid driver’s license is obviously one requirement, but no rental company could survive very long if that were all they required of someone trying to rent a vehicle. Possession of a major credit card in the renter’s name that can be authorized for the amount of the rental is a common requirement and many rental companies will only rent to those that have one. Other companies will rent to those with a debit card or even do “cash rentals” to those without even a debit card, but to survive they must have further qualification procedures, such as verification of employment by providing pay stubs, verification of residence by providing utility bills, etc. Whatever the procedures are, they must be reasonable, not discriminatory and designed to avoid entrusting your vehicle to irresponsible, unsafe drivers.
Second, and just as important if not more so, these procedures must be followed every time. All negligent entrustment cases that I have been involved have been situations where a company’s procedures were not followed and the vehicle ended up in the hands of an obviously unqualified driver who caused a terrible accident, resulting in serious injuries and often death.
In summary, have well documented, reasonable qualification procedures, train your staff well and do not tolerate any deviations from your procedures.
If you would like to discuss this topic in more detail, please feel free to contact me.