Rented Vehicle Liability

On Behalf of | Oct 16, 2015 | Personal Injury

Generally, when owners allow incompetent operators to drive their vehicles, the owners may be liable for car crash damages under the theory of negligent entrustment. The lack of a valid license is not necessarily conclusive proof of incompetence, especially if the suspension was for failure to pay child support or some other non-safety issue. But if the license was suspended for a safety or health reason, particularly if the suspension incident happened recently, a reasonable juror could certainly conclude that the driver was incompetent.

However, this pathway to recovery is not available with regard to rented or short-term leased vehicles, thanks to an obscure provision that was very quietly inserted into the federal Transportation Equity Act and is commonly known as the Graves Amendment.


49 USC 30106 has practically no legislative history, other than a few minutes of floor debate immediately prior to its passage in 2005. There are absolutely no committee hearings or legislative studies. In the early 2000s, about a dozen states (not including Texas) passed laws that made vehicle leasing franchises, like U-Haul, Ryder, Hertz, Enterprise, and so on, liable for damages in a motor vehicle collision involving a leased vehicle.

Business groups, concerned about increased costs and the possibility of lawsuits, worked behind the scenes to engineer the Graves Amendment. This law states that the owner of a vehicle, or the affiliate of an owner, is not liable for damages caused by a lessee if:

  • The owner or affiliate’s primary business is leasing vehicles, and
  • There was no negligence or criminal conduct on the part of the owner or affiliate.

The Graves Amendment also specifically prohibits states from passing owner liability laws.

Avoiding the Graves Amendment

Although the two parts of the Graves Amendment seem to block any possible liability claim against a franchisor or franchisee, this is simply not the case.

Many local affiliates, especially of moving truck companies, are not in the “primary business” of leasing vehicles. While they have a few trucks on the lot, they also sell moving supplies, rent storage units, provide security for those storage units, and may engage in other activities as well. Secondly, some rental companies have a policy to verify the customer’s license. If the employee fails to perform the check, or knowingly leases a vehicle to a person with an invalid license, there is evidence of negligence.

For a free consultation with a professional team that works hard to win maximum compensation for your injuries, contact an experienced personal injury attorney in New Braunfels today. You have a limited amount of time to act.