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Can a Rental Car Company Be Liable for an Accident?

By George Khoury, Esq. on December 09, 2016 | Last updated on March 21, 2019

Rental car companies make renting a car really easy. You walk in, show someone a driver's license, provide a credit card, sign a couple pieces of paper, and you're ready to drive. With smartphones and apps, it is becoming even easier. However, rental car companies frequently are doing quite a bit behind the scenes to make sure you are who you say you are, and that you are really licensed.

Ordinarily, when a person causes a car accident, they will be held liable for the damages and injuries they cause. In most states, if the owner and driver of the car are different people, the vehicle's owner can also be found liable under a theory of negligent entrustment. Additionally, if a vehicle owner lends or rents a vehicle that has not been properly maintained, they may also be found liable for an accident that results from that improper maintenance.

Negligent Entrustment

If a rental car company rents a car to someone who is not actually licensed to drive, then they may face a claim for negligent entrustment. While this claim is most frequently seen in the context of parents loaning the family car to their irresponsible teenagers, the doctrine applies in several other situations. A rental car company could be could be found liable for an accident caused by a renter that was intoxicated at the time they rented the car.

In a negligent entrustment situation the vehicle owner and driver are both liable. In some states, like California, however, a vehicle owner can only face a certain dollar amount of liability, while the driver will be required to cover the rest.

Improper Maintenance

When a rental car company provides a car to their customer, if the car has not been properly maintained, or was subject to a recall that hasn't been performed, the company could end up facing liability for an accident. For example, if a rental car company failed to change the brakes on a car that needed replacing, and a driver was unable to stop the car due to the bad brakes, then the rental car company could be found liable. The same might apply to any other component of a vehicle.

Unlike negligent entrustment, if a rental car company is found liable for an accident due to the improper maintenance of their vehicle, the driver will likely be able to avoid liability (or at least a majority of the liability).

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