Historically, the Dangerous Instrumentalities Doctrine has imposed strict liability on the owner of a motor vehicle whenever the owner “voluntarily entrusts that motor vehicle to an individual whose negligent operation causes damage to another.” However, companies that rent or lease vehicles became immune to these vicarious liability claims when Congress passed the Graves Amendment in 2005. The Graves Amendment removed liability from motor vehicle owners who engage in the trade or business of renting or leasing motor vehicles, so long as there is no negligence or criminal wrongdoing on the part of the owner. This law clearly applied to vehicle rental companies, but its application to motor vehicle dealers was questioned.
Florida HB 977
In an effort to clarify the situation, Florida enrolled House Bill 977, which takes effect July 1, 2020. HB 977 eliminates vicarious liability claims to Florida dealers regarding loaner vehicles in most situations. HB 977 provides protection to the dealer, or the dealer’s affiliated rental company, that provides the loaner. However, the bill only covers loaner vehicles given to service customers and does not cover demonstrator vehicles. It does not apply to agents or principals of the dealer, and only applies to a dealer employee if they are given a loaner while their vehicle is being repaired in the same manner as other customers.
Further, the amended law requires that the dealer or dealer affiliate: 1) obtain an executed rental or use agreement; 2) a copy of the driver’s license; and 3) a copy of insurance information showing at least the minimum coverage required by law. Additionally, HB 977 states the dealer is not responsible if the driver’s license or insurance information is false or fraudulent, the dealer is only responsible when the decision to loan the vehicle is negligent.
Suggested Language for Rental or Use Agreements
Suggested language for the required rental or use agreement: “Pursuant to section 324.021(9), Florida Statutes, the driver of this vehicle will be solely responsible for any damage caused to persons or property. Dealer will not be responsible for damage caused by the operation of this vehicle.”
Florida dealers should contact experienced franchised motor vehicle dealer counsel to discuss the implications of House Bill 977.