[Congressional Record Volume 145, Number 77 (Wednesday, May 26, 1999)]
[Extensions of Remarks]
[Pages E1110-E1111]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                INTRODUCTION OF THE RENTAL FAIRNESS ACT

                                 ______
                                 

                             HON. ED BRYANT

                              of tennessee

                    in the house of representatives

                        Wednesday, May 26, 1999

  Mr. BRYANT. Mr. Speaker, I rise to introduce the ``Rental Fairness 
Act of 1999.'' This measure addresses two important issues. First, the 
impact of state vicarious liability laws on interstate commerce and 
motor vehicle renting and leasing consumers across the nation. Second, 
the question as to whether vehicle renting companies must be licensed 
to sell insurance products to their customers--insurance that is 
optional but frequently very important to many car and truck rental 
customers who are under insured or have no insurance at all.

[[Page E1111]]

  Title I of the Rental Fairness Act will, for a limited period of 3 
years, adopt a federal presumption that companies that rent motor 
vehicles need not be licensed to sell insurance products to their 
customers for the term of the rental. Recently, class action lawsuits 
have been filed in three states accusing these rental companies of 
selling insurance without a license--despite the fact the these 
companies have been offering these products to their customers for 
almost three decades.
  For many car and truck rental customers, these supplemental insurance 
purchases are not just a luxury--they are a necessity. For customers 
who carry minimal automobile insurance, or no insurance at all, the 
insurance products offered by car and truck rental companies are an 
important and inexpensive method of buying short-term, comprehensive 
insurance to protect themselves against accidents or theft. If this 
federal presumption is not adopted, these companies may cease to offer 
these products altogether--leaving many customers with no means of 
protecting themselves from potential liability during the rental of a 
motor vehicle.
  The car and truck rental industry already has undertaken a huge 
effort to clarify their need to be licensed under each state's 
insurance laws on a state-by-state basis. To date, twenty-four states 
have clarified, either through regulation or legislation, their 
positions on this issue. Until the other states can act on this issue, 
Title I will offer this industry protection from these types of class 
action lawsuits.
  Title I in no way undermines the primacy of the states in regulatory 
insurance. In fact, it specifically restates the primary role of the 
states in insurance regulation. Title I of the Act has the support of 
the trade associations representing insurance agents because these 
groups realize the rental companies do not compete directly with 
insurance agents on these types of face-to-face, rental transaction-
specific insurance sales.
  Title II of this act will pre-empt the laws of a small number of 
states that impose unlimited vicarious liability on companies that rent 
or lease motor vehicles. Normally under our system of jurisprudence, 
defendants in lawsuits are held liable based upon their actions or 
inactions only. Unfortunately, a small number of jurisdictions--six 
states and the District of Columbia--ignore his general principle this 
minority of states subject rental and leasing companies to unlimited 
liability for accidents caused by their customers that involve the 
company's vehicles--despite the fact that the company was not at fault 
for the accident in any way. This type of vicarious liability--
liability without fault+holds these companies liable even when they 
have not been negligent in any way and the vehicle operated perfectly.
  The measure I am introducing prevents states from holding companies 
liable for accidents involving their vehicles based solely upon their 
ownership of the vehicles. The bill makes clear that rental and leasing 
companies would still be liable if they negligently rent or lease the 
vehicle. The bill also would hold the companies liable if the vehicle 
did not operate properly. It makes clear that these companies are not, 
under this bill, excused from meeting state minimum insurance 
requirements on their motor vehicles.
  Forty-four states have discarded the unfair and outmoded doctrine of 
vicarious liability for companies that rent or lease motor vehicles. 
This problem attracted my attention because of the impact the policies 
of these small number of states have on interstate commerce. These 
vicarious liability states impose what amounts to a tax on rental and 
leasing customers nationwide. Rental and leasing companies must attempt 
to recover the roughly $100 million they annually pay on vicarious 
liability claims from customers nationwide--not just from citizens in 
vicarious liability states. Smaller rental and leasing companies and 
licensees of the larger systems have been driven out of business by 
just one vicarious liability claim.
  In addition, vicarious liability discourages competition in these 
states. There are motor vehicle rental companies that will not do 
business in these states for the fear of being held vicariously 
liable--reducing competition in these states and impacting all 
customers that rent or lease in these states. Finally, vicarious 
liability establishes an absurd legal disconnect. If a vehicle is 
purchases from a bank or finance company, then there is no vicarious 
liability. However, if that same vehicle is leased, vicarious liability 
applies.
  For these collective reasons, Title II of the Act and the reforms it 
implements are long overdue. Everyone, companies and individuals alike, 
should be held liable only for harm they caused or could have 
prevented. The only way these companies can prevent this harm would be 
to go out of business. This is an absurd expectation that will be 
remedied by this bill.
  I look forward to hearings on this matter and working with my 
colleagues to ensure its passage.

                          ____________________