« Back to BG&S in the News

Renters Beware (and Maybe Rental Agencies too!)
By: Craig J. Bruno, Esq. and Michael A. Callinan, Esq.

As you get ready for that long drive to the Grand Canyon for summer vacation, you subconsciously make a list of everything that needs to be done before you leave. After all, it's been a few years since you drove across country and its the first time that you are going to do so with the spouse and kids.

So mentally you run down your checklist before you leave: luggage packed and ready to go; reservations at the hotel confirmed; rental car already picked-up from a rental agency at J.F.K.; extra money and credit cards in the wallet; kids accounted for and waiting in the car. It looks like everything is okay and the ground work is set for this to be the best family vacation yet.

But what happens if the unthinkable occurs and you get into an accident while driving across country? Thank God nobody got hurt but somehow the rental car is strewn across the highway in hundreds of pieces. Am I liable for the damage? Am I going to have to pay to replace the car? Does my insurance cover the loss? If this was the summer of 2003, there would be no need for concern. However, come February 24, 2004, changes are set to take place to Section 396-z of the New York Consolidated Law Service General Business Law that will have serious repercussions on renters and rental car agencies that do business in New York State.

New York CLS General Business Law §396-z covers all areas relating to the renting of vehicles and the protections afforded to renters thereto. Up until the recent amendments were enacted by the New York State Legislature in 2002, a renter's maximum liability for damages sustained to a rental automobile were capped at one hundred dollars. The one hundred dollar cap was eviscerated if the renter violated the rental agreement by intentionally causing the damage to the automobile; the damage arose out of the renter's operating the automobile under the influence of alcohol or drugs; or under several other provisions with the renter's behavior violating public policy constraints.

Craig J. Bruno is a 1981 graduate of the Southwestern University School of Law and is the managing partner of Bruno, Gerbino & Soriano, LLP, a forty-five attorney law firm located in Melville, New York. Michael A. Callinan is a 2002 graduate of Hofstra University School of Law and a second year associate at Bruno, Gerbino & Soriano, LLP.


The new law, however, removes the one hundred dollar cap and places full liability with the renter for any damages sustained to the vehicle. At first glance this seems like a harsh penalty but there is recourse for the renter. Under the new amendments, a rental car agency must now offer Optional Vehicle Protection (OPV) to the renter at a cost of no more than nine dollars per day for a vehicle valued under thirty thousand dollars. The offer for OPV must be conspicuously stated or mentioned in any advertisement by a rental agency that indicates the costs of renting a vehicle. Further, the amendments set forth that the rental agency must disclose the OPV option apart from other provisions of the rental contract, in boldface type and in no smaller print than ten point type. In the separate OPV section, the rental agency must also disclose that said protection may be afforded by the renters credit card or through the renters own personal vehicle insurance, and recommends that the renter check same prior to renting the vehicle.

If the damage sustained to the rental vehicle is the result of any hazardous or intentional act performed by the renter, as enumerated in the recent amendments, the rental agency may void the coverage provided by the OPV. These actions are similar to those under the pre-amendment statute, which would eviscerate the previous one hundred dollar liability cap.

Several other minor changes to the law sets forth that the rental agency must inform the renter of their right to inspect the vehicle for damages after it has been returned to the rental agency; that a renter is not liable for mechanical damage unrelated to an accident or for any other normal wear and tear to the vehicle; that the total liability that can be assessed against a renter is the actual and reasonable cost to repair the vehicle or the fair market value of the vehicle immediately prior to the damage occurring; that the maximum fee for an additional authorized driver shall not exceed three dollars per day; and that no rental agency shall require a deposit or advance charge against a credit card for damages possibly sustained to the rental vehicle.

It is not clear from the statute what result would come if a rental agency did not conspicuously follow the new provisions. One could infer from the strong language of the amendments that deficiencies in the rental agreement would be construed against the rental agency and the rental agency would then be left footing the bill for the repairs. Renters beware!

For vehicles valued over thirty thousand dollars a rental car agency may not charge more than twelve dollars per day.

« Back to BG&S in the News