Renting, Leasing Companies Applaud Liability Legislation
June 29, 1999
Congress is considering legislation that would free truck renting and leasing companies from the unlimited liability imposed on them by some states.
Eleven states have "vicarious liability" laws that say renting and leasing companies are liable for damages caused by their customers' accidents, whether or not they could have prevented the accidents. The bills in the House and Senate would preempt the "vicarious" part of those laws, while keeping the companies responsible for the condition of their vehicles and for proper insurance.
The truck renting and leasing industry is elated by the prospect of being released from this liability.
"Vicarious liability is terribly unfair, economically abusive and does not serve the public interest," said Mike Payne, president and CEO of the Truck Renting and Leasing Assn.
TRALA estimates that this form of liability costs the industry $100 million a year. Payne explained that in the 11 states, suits following accidents invariably lead to high settlements. "Under vicarious liability, if you exist, you are at fault."
Sen. John McCain, R-AZ, who sponsored the Senate version of the bill, noted that supporters of vicarious liability say it's needed to ensure that an innocent third party can recover damages in an accident.
But this has led to absurd results, McCain continued. "If a vehicle is purchased from a bank or finance company, then there is no vicarious liability. However, if that same vehicle is leased, vicarious liability applies."
Hearings on the Senate bill (S. 1130) and House bill (H.R. 1954) are expected later in this session.