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Union Calendar No. 510

106TH CONGRESS

2D SESSION H. R. 1954

[Report No. 106–774, Part I]

To regulate motor vehicle insurance activities to protect against retroactive

regulatory and legal action and to create fairness in ultimate insurer

laws and vicarious liability standards.

IN THE HOUSE OF REPRESENTATIVES

MAY 26, 1999

Mr. BRYANT (for himself, Mr. OXLEY, Mr. BURR of North Carolina, Mr.

LARGENT, Mr. SHADEGG, Mr. PICKERING, and Mr. COBURN) introduced

the following bill; which was referred to the Committee on Commerce

JULY 20, 2000

Reported with an amendment and referred to the Committee on the Judiciary

for a period ending not later than September 15, 2000, for consideration

of such provisions of the bill and amendment as fall within the jurisdiction of that committee pursuant to clause 1(k), rule X

[Strike out all after the enacting clause and insert the part printed in italic]

SEPTEMBER 15, 2000

Additional sponsors: Mrs. CUBIN, Mr. BARTON of Texas, Mr. BLUNT, Mr.

MORAN of Virginia, Mr. STEARNS, Mr. ROGAN, and Mr. WICKER

SEPTEMBER 15, 2000

The Committee on the Judiciary discharged; committed to the Committee of

the Whole House on the State of the Union and ordered to be printed

[For text of introduced bill, see copy of bill as introduced on May 26, 1999]

A BILL

To regulate motor vehicle insurance activities to protect
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against retroactive regulatory and legal action and to

create fairness in ultimate insurer laws and vicarious

liability standards.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Rental Fairness Act of 2000’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings and purposes.

Sec. 3. Definitions.

Sec. 4. General fairness and responsibility rule.

Sec. 5. Preservation of State law.

Sec. 6. Preservation of liability based on negligence.

Sec. 7. Applicability and effective date.

8 SEC. 2. FINDINGS AND PURPOSES.

9 The Congress finds that—

10 (1) The vast majority of State statutes and com11 mon law follow the generally accepted principle of

12 law that a party should be held liable only for harm

13 that the party could guard against.

14 (2) A small number of State common laws and

15 statutes still do not recognize this accepted principle

16 of law, and continue to subject companies that rent

17 or lease motor vehicles to vicarious liability for the

18 negligence of their rental customers in operating the

19 motor vehicle simply because of the company’s owner-
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1 ship, even where the rental company has not been

2 negligent in any way and the motor vehicle operated

3 properly.

4 (3) An even smaller minority of State laws im5 pose unlimited liability on the companies for the

6 tortious acts of their customers, without regard to

7 fault.

8 (4) These small number of vicarious liability

9 laws pose a significant competitive barrier to entry

10 for smaller companies attempting to compete in these

11 markets, in contravention of the fundamental legal

12 principle of fairness prohibiting liability without

13 fault.

14 (5) Furthermore, because rented or leased motor

15 vehicles are frequently driven across State lines, these

16 small number of vicarious liability laws impose a dis17 proportionate and undue burden on interstate com18 merce by increasing rental rates for all customers

19 across the nation.

20 (6) Due to high liability costs and unwarranted

21 litigation costs, consumers face higher vehicle rental

22 costs in all States because of the increased insurance

23 expenses required to provide coverage in the interstate

24 insurance and rental markets.
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1 (7) Rental fairness will lessen burdens on inter2 state commerce and decrease litigiousness.

3 (8) Legislation to address these concerns is an

4 appropriate exercise of the powers of Congress under

5 clauses 3, 9, and 18 of section 8 of article I of the

6 Constitution of the United States, and the 14th

7 amendment to the Constitution of the United States.

8 SEC. 3. DEFINITIONS.

9 For the purpose of this Act—

10 (1) HARM.—The term ‘‘harm’’ means—

11 (A) any injury to or damage suffered by a

12 person;

13 (B) any illness, disease, or death of that

14 person resulting from that injury or damage;

15 and

16 (C) any loss to that person or any other

17 person resulting from that injury or damage.

18 (2) MOTOR VEHICLE.—The term ‘‘motor vehicle’’

19 shall have the meaning given to this term under sec20 tion 13102(14) of title 49, United States Code.

21 (3) OWNER.—The term ‘‘owner’’ means a person

22 who is—

23 (A) a record or beneficial owner or lessee of

24 a motor vehicle;
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1 (B) entitled to the use and possession of a

2 motor vehicle subject to a security interest in an3 other person; or

4 (C) a lessee or bailee of a motor vehicle, in

5 the trade or business of renting or leasing motor

6 vehicles, having the use or possession thereof,

7 under a lease, bailment, or otherwise.

8 (4) PERSON.—The term ‘‘person’’ means any in9 dividual, corporation, company, limited liability

10 company, trust, association, firm, partnership, soci11 ety, joint stock company, or any other entity (includ12 ing any governmental entity).

13 (5) STATE.—The term ‘‘State’’ means each of the

14 several States, the District of Columbia, the Common15 wealth of Puerto Rico, the Virgin Islands, Guam,

16 American Samoa, the Northern Mariana Islands, any

17 other territory or possession of the United States, or

18 any political subdivision of any such State, common19 wealth, territory, or possession.

20 SEC. 4. GENERAL FAIRNESS AND RESPONSIBILITY RULE.

21 (a) IN GENERAL.—No owner engaged in the trade or

22 business of renting or leasing motor vehicles may be held

23 liable for harm caused by a person to himself or herself,

24 to another person, or to property, which results or arises

25 from that person’s use, operation, or possession of a rented
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1 or leased motor vehicle, by reason of being the owner of such

2 motor vehicle, except to the extent of any required financial

3 responsibility statute.

4 (b) CONSTRUCTION.—Subsection (a) shall not apply if

5 such owner does not maintain the required limits of finan6 cial responsibility for such vehicle, as required by State law.

7 SEC. 5. PRESERVATION OF STATE LAW.

8 (a) STATE FINANCIAL RESPONSIBILITY REQUIRE9 MENTS.—Nothing in this Act shall relieve any owner en10 gaged in the trade or business of renting or leasing motor

11 vehicles from the obligation to comply with a State’s min12 imum financial responsibility, motor vehicle, or insurance

13 statutes or regulations imposed by that State for the privi14 lege of registering and operating a motor vehicle within that

15 State.

16 (b) PRIORITY OF PAYMENTS.—Nothing in this Act

17 shall preempt any State law regarding priority of payment

18 requirements or whether coverages provided under such stat19 utes or regulations are primary or secondary.

20 SEC. 6. PRESERVATION OF LIABILITY BASED ON NEG21 LIGENCE.

22 Nothing in this Act shall preempt the ability of the

23 States to impose liability based on acts of negligence or

24 criminal wrongdoing.
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1 SEC. 7. APPLICABILITY AND EFFECTIVE DATE.

2 Notwithstanding any other provision of law, this Act

3 shall apply with respect to any action commenced on or

4 after the date of enactment of this Act without regard to

5 whether the harm that is the subject of the action or the

6 conduct that caused the harm occurred before such date of

7 enactment.
Union Calendar No. 510

106TH CONGRESS

2D SESSION H. R. 1954

[Report No. 106–774, Part I]

A BILL

To regulate motor vehicle insurance activities to

protect against retroactive regulatory and legalaction and to create fairness in ultimate insurerlaws and vicarious liability standards.

SEPTEMBER 15, 2000

The Committee on the Judiciary discharged; committed

to the Committee of the Whole House on the State ofthe Union and ordered to be printed