Gen. 295] 295

 All statutory references, unless otherwise specifically indicated, 1

are to Article 48A, the Insurance Code.

INSURANCE

INSURANCE ) CASUALTY ) VEHICLE LAWS ) COLLISION DAMAGE

TO RENTAL VEHICLES

July 27, 1994

The Honorable Michael J. Wagner

Maryland Senate

On behalf of your constituent, Enterprise Rent-A-Car, you have

requested our opinion on the meaning of certain provisions of

Article 48A, §541(d) of the Maryland Code, relating to collision

damage to rental vehicles. The provisions at issue were added to 1

the Insurance Code last year as a result of the enactment of Chapter

261 (Senate Bill 732) of the Laws of Maryland 1993. 

When a rental vehicle is involved in an accident with an

uninsured motorist or a vehicle whose driver is not known

(“phantom vehicle”), the two insurers that might be liable for the

collision damage are the insurer covering the fleet of vehicles leased

by the rental car company, under a commercial fleet automobile

policy; or the insurer covering the person who has rented the car, the

lessee, under a personal automobile insurance policy. Enterprise

asserts that the responsible insurer is the lessee’s insurer, through the

collision coverage that is part of the lessee’s personal automobile

insurance policy, and bases its conclusion on §541(d)(4)(iv), which

states as follows:

An insurer may not deny coverage to an

insured for collision damage to a rental

vehicle because:

1. The accident involved an uninsured

motorist; or

2. The identity of the motor vehicle causing

the damage cannot be ascertained.
296 [79 Op. Att’y

 Subtitle 35 of the Insurance Code specifies certain coverages that 2

are required to be a part of motor vehicle liability insurance policies issued

in this state. For example, Section 539 prescribes a minimum coverage of

$2,500 for medical, hospital, and disability benefits, a coverage commonly

referred to as Personal Injury Protection benefits or PIP. Section 541(a)

incorporates the provisions in Title 17 of the Transportation Article

requiring drivers to have “security” in the form of a motor vehicle liability

policy with the minimum coverages specified in §17-103(b)(1) through (4)

of the Transportation Article. 

For the reasons stated below, we conclude that §541(d)(4)(iv)

does not specify which insurer will be responsible for property

damage to a rental vehicle that has been damaged by an uninsured

motorist. The addition of this provision, as well as the other changes

made to §541(d) by Senate Bill 732, were not intended by the

General Assembly to allocate responsibility between insurers for the

damage to a rental vehicle. Rather, the legislative change was made

simply to clarify that a payment under a lessee’s collision coverage,

which by law extends to rental vehicles, may not be denied to the

lessee if the damage is caused by an uninsured motorist or a phantom

vehicle. The new provisions do not affect the obligation of the

lessor to carry certain uninsured motorist coverage for property

damage as required by the Transportation Article.

I

Lessee’s Collision Coverage

 Your inquiry relates to collision coverage, a type of insurance

coverage which is not in the list of mandatory automobile insurance

coverages required by Maryland law. Collision coverage is 2

optional. It is defined in §541(d)(3) as: 

insurance without regard to fault against

accidental property damage to the insured

motor vehicle caused by physical contact of

the insured motor vehicle with another motor

vehicle or with another object or by upset of

the insured motor vehicle, if the accident

occurs within the United States of America, its

territories or possessions, Canada or Mexico.
Gen. 295] 297

Under Subtitle 21 of the Commercial Law Article, lessors of 3

rental vehicles must include in their rental motor vehicle agreement form

or in a separate document the following notice:

“Notice: This contract offers, for an additional

charge, a collision damage waiver to cover your

responsibility for damage to the vehicle. Before

deciding whether to purchase the collision damage

waiver, you may wish to determine whether your

own automobile insurance affords you coverage

for damage to the rental vehicle and the amount of

the deductible under your own insurance

coverage. The purchase of this collision damage

waiver is not mandatory and may be waived.

Maryland law requires that all Maryland residents’

insurance policies with collision coverage

automatically extend that collision coverage to

passenger cars rented by the insured’s named in

the policy for a period of 30 days or less.”

§14-2101(e)(5) of the Commercial Law Article. Another document must

disclose the cost of the collision damage waiver and any conditions or

exclusions applicable to the waiver. The Consumer Protection Division

of the Attorney General’s Office has developed a Collision Damage

Waiver Disclosure Form for use by the rental vehicle businesses. This

form states, in part, that the car rental agreement generally requires the

lessee to accept responsibility for all damage or loss to a rental car,

whether or not the lessee is at fault.

In 1990, the General Assembly added a new provision, now

§541(d)(4), requiring that, if a private passenger automobile

insurance policy issued in Maryland does include collision coverage,

that coverage must extend to passenger cars “rented by an insured

for a period of 30 days or less under a rental agreement as otherwise

defined in §14-2101 of the Commercial Law Article.” See Chapter

473 of the Laws of Maryland 1990.

In 1993, the General Assembly, through the enactment of

Chapter 261, made several changes to §541(d) and one change to

§14-2101 of the Commercial Law Article relating to collision

damage waivers. The only change to §541(d) relevant to 3

Enterprise’s inquiry is the addition of the language codified as

§541(d)(4)(iv): 
298 [79 Op. Att’y

 Of the four changes made to §541(d) by Chapter 261, only the 4

addition of subparagraph (iv) to §541(d)(4) is relevant to Enterprise’s

inquiry. The addition of new language for §541(d)(2) allows insurers to

offer “optional coverage for damages incurred by the insured as a result

of the loss of use of a rental vehicle.” Another change was the addition of

a definition of “passenger car” which includes Class M (Multipurpose)

vehicles. Finally, a reference to the previous definition of a passenger car

was eliminated from the law. The only change made to Commercial Law

Article §14-2101 was the addition of the same definition of “passenger

car” that was newly added to §541(d) by the bill.

An insurer may not deny coverage to an

insured for collision damage to a rental

vehicle because:

1. The accident involved an uninsured

motorist; or

2. The identity of the motor vehicle causing

the damage cannot be ascertained.4

“When called upon to construe a particular statute, we begin

our analysis with the statutory language itself, as the words of the

statute, given their ordinary and popularly understood meaning, are

the primary source of legislative intent. If the language of the statute

is plain and clear and expresses a meaning consistent with the

statute’s apparent purpose, no further analysis is ordinarily

required.” Gargliano v. State, 334 Md. 428, 435, 639 A.2d 675

(1994) (citations omitted). All statutory text ought to be viewed in

context, however, including its relationship to other laws. NCR

Corp. v. Comptroller of Treasury, 313 Md. 118, 125, 544 A.2d 764

(1988). ANA Towing, Inc. v. Prince George’s County, 314 Md. 711,

718 n.5, 522 A.2d 1295 (1989). In this instance, both the statutory

text and its context make manifest the limited scope of

§541(d)(4)(iv). 

Considering the plain meaning of its text, §541(d)(4)(iv)

simply addresses the relationship between an insurer providing

collision coverage and the insured who has purchased the coverage.

No mention is made of the lessor of the rental vehicle that has been

damaged in a collision with an uninsured motorist or a phantom

vehicle. 
Gen. 295] 299

The statutory language is simple and direct: the insurer “may

not deny coverage to an insured.” This language perhaps assumes,

but it surely does not require, that an insured renting a vehicle

damaged by an uninsured motorist or phantom vehicle will file a

claim with the insurer providing collision coverage, if such optional

coverage was purchased. According to the definition of collision

coverage, a “no-fault” coverage, and the explicit provisions of

§541(d)(4)(iv), a claim under collision coverage to have a rental

vehicle repaired following a collision with an uninsured or phantom

vehicle will be paid by the insurer. It would be a violation of the law

for the lessee’s insurer to deny the collision claim even though there

may be other insurance that could cover the loss. But §541(d)(4)(iv)

simply does not mandate the filing of the claim in the first place.

In the interest of completeness, we may also look to any

evidence of the General Assembly’s purpose in the legislative

history. Harris v. State, 331 Md. 137, 146, 626 A.2d 946 (1993);

Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628,

632 (1987). The Department of Legislative Reference’s file on the

bill consists of just a few pages. Neither the Floor Report nor the

amendments relate to the addition made to §541(d)(4). Instead, the

focus is on the addition of §541(d)(2) relating to “optional coverage

for damages incurred by the insured as a result of the loss of use of

a rental vehicle.” Nothing in the bill file detracts from the

conclusion that the language of the amendment should be literally

applied. 

II

Lessor’s Property Damage Coverage

The context of §541(d)(4)(iv) includes §18-102 of the

Transportation Article and the regulations adopted pursuant to that

law. The Motor Vehicle Administration will not register a vehicle

that is to be rented until the owner of the vehicle certifies that the

owner has “security for the vehicle in the same form and providing

for the same minimum benefits as the security required by Title 17

of this article for motor vehicles.” TR §18-102(a). The persons to

be covered by the “security” are described in TR §18-102(b) as

follows: “Notwithstanding any provision of the rental agreement to

the contrary, the security required under this section shall cover the

owner of the vehicle and each person driving or using the vehicle

with the permission of the owner or lessee.” 
300 [79 Op. Att’y

The insurance requirements for vehicles which are to be rented

are detailed in regulation as follows:

A person in the business of renting or

leasing motor vehicles, trailers, or semitrailers

shall file with the Financial Responsibility

Division of the Administration, for each

vehicle rented or leased, a copy of the liability

insurance policy or proof of Maryland selfinsurance certification required under

Transportation Article, Titles 17 and 18,

Annotated Code of Maryland, and a copy of

the standard rental or lease agreement upon

demand. The insurance policy or self-insurer

shall provide primary coverage to the owner,

the lessee, and each person driving or using

the motor vehicle, trailer or semitrailer with

permission of the owner or lessee,

notwithstanding any provisions of the rental or

lease agreement to the contrary. The owner of

the motor vehicle, trailer, or semitrailer which

is to be rented or leased for a period exceeding

180 days may satisfy the owner’s obligation to

provide security by requiring the lessee to

procure the security.

COMAR 11.18.01.03(A) (emphasis added).

It is clear from TR §18-102 and the regulation quoted above

that the State requires the owners of rental vehicles to provide the

primary insurance coverage for the vehicles for those coverages that

are mandated by TR §17-103. This mandated coverage includes

coverage for property damage losses caused by uninsured motorists.

TR §17-103(b), subsections (1) through (4), detail the coverages

required by law. Subsection (4) requires the “benefits required

under Article 48A, §541 of the Code as to required additional

coverage.”

This reference to §541 relates to the provisions in §541(c)(1)

defining an uninsured motor vehicle and describing in §541(c)(2) the

coverages that must be in every motor vehicle liability policy.

Throughout this statute, the focus is on coverage for bodily injury

and death, and there is no explicit mention of uninsured property

damage coverage. However, the property damage component of

uninsured motorist coverage can be found in subsection (v), which
Gen. 295] 301

states: “In no case shall the uninsured motorist coverage be less than

the coverage afforded a qualified person under Article 48A, §§243H

and 243-I ....”

Under §243H, a person can make a claim against the Maryland

Automobile Insurance Fund for “claims for the death of or personal

injury to a qualified person or for damage to property in excess of

$250” arising out of the ownership, maintenance, or use of a motor

vehicle and caused by an unidentified operator, an operator whose

whereabouts cannot be ascertained, or an uninsured operator.

Therefore, the uninsured motorist coverage mandated by §541(c)(2)

is generally understood to include coverage for property damage, in

addition to other liability coverages required by Title 17 of the

Transportation Article.

The fact that owners of rental vehicles are required to provide

primary coverage for the vehicle and the persons renting and driving

the vehicle cannot be ignored when considering Enterprise’s

contention that §541(d)(4)(iv) enables rental vehicle owners to

receive payment from a lessee’s collision coverage. There is nothing

in §541(d)(4)(iv) that changes the legal requirement for owners to

purchase mandatory coverages for rental vehicles or that negates the

regulatory characterization of the lessor’s insurance as “primary.”

Furthermore, as discussed above, the lessor’s insurance must include

coverage for property damage to a rental vehicle caused by an

uninsured motorist or phantom vehicle. 

III

Conclusion

In summary, it is our opinion that Article 48A, §541(d)(4)(iv)

does not transform a lessee’s insurer into the primary insurer of the

cost of property damage to a rental vehicle when the vehicle is

damaged by an uninsured motorist or a phantom vehicle. Nothing

in the law, however, prevents a rental vehicle owner from making

demand upon the lessee for the cost of the repairs to the rental

vehicle if the rental agreement places the responsibility for such

damage upon the lessee. In such a case, the lessee may choose to

make a collision coverage claim under the lessee’s personal

automobile policy. If the lessee does so, the lessee’s insurer may not
302 [79 Op. Att’y

deny payment of the claim because the damage was caused by an

uninsured motorist or phantom vehicle. 

J. Joseph Curran, Jr.

Attorney General

Susan Cohen

Assistant Attorney General

Jack Schwartz

Chief Counsel

Opinions & Advice

Editor’s Note:

The provision construed in this opinion, former Article 48A,

§541, has been recodified at §19-512 of the Insurance Article.