Graves Amendment: Rental Car Accident Liability (Feb 2025)

Vicarious Liability

Under a legal theory called vicarious liability, injured people can sue someone other than the party who injured them. For example, someone injured by a child might have a case against the parent.

Likewise, a victim injured by an employee performing their job duties can often sue the employer. This version of vicarious liability, called respondeat superior, dates back centuries. The underlying idea is that a “servant” acts for the benefit of their “master.” When the servant injured someone or damaged their property, the master bore the burden.

Vicarious liability has always represented a tradeoff. On the one hand, the person who caused the injury might have significantly fewer resources to pay a personal injury judgment. Thus, imposing vicarious liability gave victims access to greater compensation.

On the other hand, vicarious liability is often unfair. The liable party might not have had control over the person who caused the injury. Imposing liability on a party for actions they did not order seems unfair in many situations.

This unfairness was one reason why the car accident law of many states did not impose vicarious liability on rental car companies. The car company has no control over the vehicle after it leaves its premises. The party that causes the crash, namely the driver, should bear the resulting liability.

Some states tried to change these rules. New York, for example, has a law imposing liability for car crashes on the vehicle’s owner. When applied to minor children and their parents, this law might make sense since the parents typically have insurance.

However, imposing liability on rental car companies could have threatened the viability of the industry.

What Is the Graves Amendment?

The Graves Amendment is a federal law that insulates rental companies from state laws that impose vicarious liability on them. This law overrides state laws under the U.S. Constitution’s Supremacy Clause. In other words, the Graves Amendment answers the question of whether rental car companies are vicariously liable for crashes caused by customers. The answer is no.

The Graves Amendment covers all companies in the business of renting motor vehicles. Thus, it does not apply when you lend your car to your friend. Instead, it only applies to companies that rent cars, moving trucks and other vehicles.

Notably, the law does not require the company to rent vehicles as its primary business. Thus, a home improvement store that offers rental pickup trucks to customers might qualify for Graves Amendment truck leasing immunity.

Graves Amendment Exceptions

The law does not give blanket immunity to Graves Amendment rental cars. First, you still have the ability to pursue legal claims for your injuries against an at-fault driver. Thus, you have the same option you always have when another driver negligently crashes into you.

Second, the law does not immunize rental companies from their own negligence. A rental company could be liable for negligence in a few situations.

The rental company could supply a vehicle to a customer that required maintenance or repairs. If the car malfunctions and causes the driver to crash into another vehicle, the company’s liability arises from its own actions and not vicariously from the actions of its customer.

The company could improperly instruct the driver in operating the vehicle. If the driver relied on the company’s incorrect instructions and caused a crash, any injured victims may have a claim against the rental company.

The most commonly used exception to the Graves Amendment involves driver screening. For example, car rental companies in California may be held liable for negligent entrustment if they fail to conduct a reasonable investigation before renting the vehicle to someone.

The company will typically check the renter’s driving record and verify that they have a valid driver’s license. If this check uncovers anything that would raise reasonable concerns about the driver, the company should decline to rent the vehicle. If it rents the vehicle anyway, accident victims could argue that it negligently entrusted its vehicle to a dangerous driver.

The Graves Amendment negligent entrustment exception can open the door to a lawsuit against the rental company. However, your car accident attorney must prove the information could have been discovered through a reasonable search and that it would have raised legitimate concerns about the driver’s ability to drive safely.

Contact ConsumerShield for Assistance After a Rental Car Crash

Every collision is unique. As a result, there is no hard and fast rule to predict when a car rental company may be liable for your injuries. Instead, you will need a lawyer to analyze your situation and determine the parties you can pursue for compensation.

ConsumerShield educates consumers about their rights and helps them find legal representation. Contact us for a free case review and lawyer referral.