A car accident can become especially confusing when the at-fault driver was operating a rental vehicle. The injured person may wonder whether to file a claim against the driver, the rental car company or one of several insurance providers connected to the rental.
In most cases, renting a vehicle does not shift responsibility for negligent driving to the rental company. The rental car driver remains legally responsible for the accident, and the driver’s applicable liability insurance is generally the first place an injured person will seek compensation.
However, determining which policy applies – and in what order – may require reviewing the driver’s personal auto policy, coverage purchased at the rental counter, the rental agreement and applicable state insurance laws.
Quick Insights
- The rental car driver is generally responsible when their negligence causes an accident.
- The driver’s personal auto liability insurance may extend to a rental vehicle.
- Supplemental liability coverage purchased from the rental company may provide additional protection.
- Credit card rental benefits usually focus on damage to the rental vehicle, not injuries caused to other people.
- The rental company is generally not liable merely because it owns the vehicle.
- A rental company may still be responsible for its own negligence, such as knowingly renting an unsafe vehicle.
- Injured people may also need to examine their own uninsured or underinsured motorist coverage.
The At-Fault Rental Car Driver Is Usually Primarily Responsible
A rental car driver is subject to the same rules of the road as someone driving a personally owned vehicle. When a driver causes a crash by speeding, following too closely, running a traffic signal, driving while distracted or engaging in other negligent conduct, that driver may be held responsible for the resulting harm.
The fact that the vehicle belongs to a rental company generally does not excuse the driver or automatically make the rental company liable. In most rental car accidents, the driver remains the primary responsible party.
An injured person may be able to pursue compensation for losses including:
- Emergency treatment and hospitalization
- Doctor visits and rehabilitation
- Future medical care
- Lost wages
- Reduced earning capacity
- Vehicle repairs or replacement
- Pain and suffering
- Other accident-related expenses
The available compensation will depend on the facts of the crash, the severity of the injuries, applicable state law and the insurance coverage available.
Does the Driver’s Personal Auto Insurance Cover the Accident?
Many personal auto insurance policies extend at least some coverage to temporary rental vehicles used for personal travel. When the rental car driver causes an accident, the liability portion of that personal policy may cover injuries and property damage suffered by other people.
Liability insurance ordinarily consists of two primary protections:
Bodily injury liability may pay for another person’s medical expenses, lost income and other injury-related losses.
Property damage liability may pay to repair or replace another person’s vehicle or other damaged property.
Coverage is not automatic in every situation. A policy may contain restrictions involving commercial use, international travel, excluded drivers, certain vehicle types or rentals lasting beyond a specified period. The policy limits also remain important. A driver with only the state-required minimum coverage may not have enough insurance to pay for a serious accident.
Drivers should therefore confirm their coverage with their insurer before renting rather than assuming their personal policy provides complete protection.
What Happens When the Driver Purchased Rental Car Insurance?
Rental agencies commonly offer several products at the counter. These products do not all provide the same protection, and some do not cover injuries caused to another driver.
Supplemental Liability Insurance
Supplemental liability insurance may increase the amount of coverage available when the renter causes bodily injury or property damage to someone else.
This coverage can be particularly important when the renter:
- Does not own a vehicle
- Does not have personal auto insurance
- Has low liability limits
- Wants additional protection beyond a personal policy
Depending on the rental agreement and applicable law, supplemental liability coverage may apply before or after another policy.
Collision or Loss-Damage Waiver
A collision damage waiver or loss-damage waiver generally concerns damage to the rented vehicle. It may relieve the renter of some or all financial responsibility if the rental car is damaged or stolen.
It is not usually liability insurance for another person’s injuries.
For example, a driver could have a loss-damage waiver that covers the damaged rental vehicle but still need separate liability coverage for the medical bills and vehicle damage suffered by the people they hit. When a renter purchased a collision damage waiver, the rental agency may waive rental-vehicle damage charges subject to the waiver’s terms, exclusions and any applicable deductible.
Personal Accident Insurance
Personal accident insurance generally provides limited medical or accidental-death benefits for the renter and, in some cases, passengers in the rental car.
It does not ordinarily replace the liability insurance needed to compensate someone outside the rental vehicle.
Personal Effects Coverage
Personal effects coverage protects certain belongings that are stolen from or damaged while inside the rental vehicle. It generally has no role in paying another person’s injury claim.
Does Credit Card Rental Coverage Pay Injury Claims?
Many credit cards provide rental car benefits when the cardholder uses the card to reserve and pay for the vehicle. However, consumers should not assume that this benefit provides broad automobile liability insurance.
Credit card coverage commonly applies to theft of or physical damage to the rental vehicle. It may be secondary coverage, meaning another applicable policy must pay first. It frequently does not cover bodily injuries or damage the driver causes to another person’s property.
Someone injured by a rental car driver should not treat the presence of a credit card benefit as proof that adequate liability coverage exists. The actual cardholder agreement must be reviewed.
What Happens If the Rental Car Driver Has No Personal Insurance?
A renter who does not own a vehicle may not have a personal auto policy. In that situation, coverage may come from liability protection purchased through the rental company or from minimum coverage required under the laws governing the rental transaction.
Progressive notes that people without personal auto insurance may need to purchase liability coverage through the rental company.
The amount and priority of coverage can vary substantially by state. Any minimum protection connected to the rental may also be too limited to cover severe injuries.
When the at-fault driver is uninsured or does not have enough insurance, an injured person may be able to turn to their own policy.
The Injured Person’s UM or UIM Coverage May Apply
Uninsured motorist coverage, commonly called UM coverage, can protect an injured person when the at-fault driver has no applicable liability insurance.
Underinsured motorist coverage, or UIM coverage, may apply when the driver has insurance but the policy limit is too low to cover the injured person’s losses.
For example, suppose a rental car driver causes an accident resulting in $200,000 in damages but has only $50,000 in applicable liability coverage. The injured person may be able to pursue the $50,000 liability limit and then make an underinsured motorist claim for additional compensation, subject to their own policy limits and state law.
Other first-party coverages may also help with immediate expenses. Depending on the state and policy, these may include:
- Personal injury protection
- Medical payments coverage
- Collision coverage
- Health insurance
- Disability insurance
Using first-party coverage does not necessarily prevent the injured person or their insurer from later pursuing reimbursement from the at-fault parties.
Is the Rental Car Company Liable for the Accident?
Rental car companies are generally not responsible solely because they own the vehicle.
The federal law commonly known as the Graves Amendment limits claims that attempt to hold a rental or leasing company vicariously liable merely for being the vehicle’s owner. Under 49 U.S.C. § 30106, a qualifying rental or leasing company is generally protected from owner-based liability when it is engaged in the business of renting vehicles and has not committed negligence or criminal wrongdoing.
In practical terms, an injured person ordinarily cannot establish rental-company liability simply by arguing:
“The company owned the car, so it must be responsible for whatever the renter did.”
The injured person generally needs evidence that the company itself did something wrong.
When Can a Rental Company Be Held Responsible?
The Graves Amendment does not provide blanket protection for a rental company’s own negligent or unlawful conduct. A company may still face liability when its actions contributed to the accident.
Negligent Vehicle Maintenance
A rental company may be responsible if it failed to reasonably inspect, repair or maintain the vehicle.
Potential examples include renting a vehicle with:
- Defective brakes
- Unsafe tires
- Steering problems
- Broken lights
- Known mechanical defects
- An unresolved safety issue that contributed to the crash
The injured person would generally need to connect the maintenance failure to the accident. It is not enough to show that the rental vehicle had an unrelated defect.
Renting a Vehicle With a Known Dangerous Condition
Liability may arise if the company knew – or reasonably should have known – that a vehicle was unsafe but placed it back into service anyway.
Maintenance records, inspection documents, prior customer complaints, repair invoices and electronic vehicle data may become important evidence in such a case.
Negligent Entrustment
An injured person may sometimes allege that the rental company negligently entrusted the vehicle to someone who was clearly unfit to drive.
These claims are highly dependent on state law and the circumstances known to the company at the time of the rental. Possible issues might include an invalid driver’s license, obvious intoxication or information demonstrating that the person was not legally permitted to drive.
A rental company is not normally expected to conduct an extensive investigation into every customer’s driving history. There must generally be evidence that the company ignored a meaningful warning sign or violated a legal duty.
Rental-Company Employee Negligence
The Graves Amendment does not ordinarily shield a rental company from an accident caused directly by one of its employees acting negligently within the scope of employment.
For example, different liability principles may apply when an employee crashes while moving, cleaning, delivering or collecting a rental vehicle.
What If Someone Other Than the Renter Was Driving?
Rental agreements usually identify the people authorized to drive the vehicle. Coverage disputes may arise when the person who caused the accident was not listed as an authorized driver.
The injured person may still have a claim against the negligent driver, but an insurer or rental protection provider could dispute whether its coverage applies.
Important questions may include:
- Did the renter give the driver permission?
- Was the driver listed in the rental agreement?
- Was the driver properly licensed?
- Did the rental company know another person would drive?
- Does state law require coverage despite the rental agreement?
- Did the driver violate any policy exclusion?
An unauthorized driver does not necessarily leave the injured person without a claim, but the insurance investigation may become more complicated.
What If the Rental Was for Work?
When someone rents and operates a vehicle for employment or business purposes, the driver’s employer may also be involved.
An employer may potentially be responsible when an employee causes an accident while acting within the scope of employment. Commercial auto insurance, a business travel policy or another corporate policy may provide coverage.
For example, an employer could potentially be implicated when an employee causes a crash while:
- Traveling to a client meeting
- Making a business delivery
- Attending a work conference
- Driving between job locations
- Performing another assigned task
Whether the employee was acting within the scope of employment depends on the specific facts and the applicable state’s law.
How Do Insurance Companies Determine Which Policy Pays First?
Rental car accidents may involve several potential policies:
1. The driver’s personal auto policy
2. Liability coverage purchased from the rental company
3. Coverage supplied under the rental agreement or state law
4. An employer’s commercial policy
5. The injured person’s UM or UIM policy
6. The injured person’s medical payments, PIP or collision coverage
7. Limited credit card rental benefits
The order in which these coverages apply is known as priority of coverage.
One policy may be primary and another excess. Alternatively, insurers may dispute which company must defend the driver or pay the claim. The answer may depend on policy language, state statutes, the rental contract and the purpose for which the vehicle was being used.
An injured person should not assume an insurer’s initial statement about priority is necessarily final. Multiple policies should be identified and independently reviewed.
What Should You Do After Being Hit by a Rental Car Driver?
The basic steps after a rental car crash are similar to those following any other motor vehicle accident, but it is particularly important to document the rental relationship.
Call 911 and Report the Accident
Request emergency assistance when anyone may be injured. A police report can document the vehicles, drivers, witnesses, location and circumstances surrounding the crash.
Obtain Medical Care
Seek prompt medical attention even when the injuries do not initially appear severe. Symptoms involving the brain, neck, back and soft tissues may emerge or worsen after the accident.
Collect Driver and Rental Information
Obtain or photograph:
- The driver’s license
- Personal insurance information
- The rental agreement
- The rental company’s name
- The vehicle’s license plate
- The vehicle identification number, when accessible
- Any rental insurance or protection documents
- The driver’s employer information if the trip was work-related
Photograph the Scene
Document vehicle damage, skid marks, debris, traffic controls, roadway conditions and visible injuries.
Identify Witnesses
Collect names, telephone numbers and email addresses from anyone who saw the accident.
Notify the Appropriate Insurers
The injured person should generally notify their own insurer, even when another driver caused the crash. The at-fault driver’s carrier, rental company and any rental coverage administrator may also need notice.
Insurers commonly request the accident’s date, time and location, contact and policy information for those involved, photographs and copies of police reports.
Be Careful With Recorded Statements and Releases
An insurance adjuster may request a recorded statement or present an early settlement offer. Avoid speculating about fault, minimizing injuries or signing a release before the full extent of the losses is understood.
What Compensation May Be Available?
A person injured by a negligent rental car driver may be entitled to compensation for both financial and nonfinancial losses.
Potential damages include:
- Past and future medical expenses
- Lost income
- Reduced future earning capacity
- Rehabilitation and therapy
- Property damage
- Rental vehicle or transportation expenses
- Out-of-pocket costs
- Physical pain
- Emotional distress
- Disability or disfigurement
- Loss of enjoyment of life
In fatal accidents, eligible surviving family members or the estate may be able to pursue a wrongful death or survival claim under applicable state law.
What Happens When the Available Insurance Is Not Enough?
Severe accidents can produce losses exceeding the available liability limits. When that happens, the injured person may need to investigate other sources of recovery.
These might include:
- Additional or umbrella insurance carried by the driver
- Employer or commercial auto coverage
- Supplemental rental liability insurance
- The injured person’s underinsured motorist coverage
- Another negligent driver
- A company responsible for a defective vehicle or component
- A government entity or contractor responsible for a dangerous road condition
- The rental company, if its independent negligence contributed to the crash
Finding all applicable coverage is often one of the most important parts of a serious rental car accident investigation.
Rental Car Liability Depends on the Facts and the Policy Language
When a rental car driver causes an accident, liability usually begins with the negligent driver and the liability coverage applicable to that driver. The driver’s personal auto insurance may provide primary protection, while supplemental rental coverage, employer insurance or other policies may provide additional benefits.
The rental company itself is ordinarily protected from liability based solely on vehicle ownership. However, that protection does not excuse negligent maintenance, knowingly providing an unsafe vehicle or other wrongdoing committed by the rental company.
Because rental car crashes can involve overlapping contracts, exclusions and insurance policies, injured people should identify every potentially responsible party and source of coverage before resolving the claim.
This article provides general information and is not legal advice. Insurance requirements, liability rules and filing deadlines vary by state. Anyone injured in a rental car accident should consult a qualified attorney in the state where the collision occurred regarding their specific circumstances.
