The automobile rental and leasing industries can say goodbye to vicarious tort liability, and the ABS market may soon be able to say hello to more rental fleet deals. A law put into effect last week eliminated vicarious liability and will significantly lighten insurance costs on automobile rental and leasing companies and is expected to spur activity in regional markets such as New York, where those costs caused many manufacturers to exit the business altogether.
Last week, President George W. Bush signed the Highway Bill, containing a provision eliminating vicarious liability on automobile rental and leasing companies. Vicarious liability allows a plaintiff to sue the finance company title holder of a vehicle in the event of an accident. The ban on vicarious liability became effective immediately upon signing.