July 10, 2023

Understanding Liability in Car Rental Accidents in Florida: A Guide

Renting a car is a convenient option for many people, whether for business or personal purposes. While no one expects the worst, accidents can happen, and when they do, questions may arise about who is responsible for the damages and injuries sustained. In Florida, state statute Fla Stat. 627.7263 governs the liability insurance coverage for rental vehicles. However, disputes can arise when insurance companies interpret these requirements differently. 

As an adjuster, if you are unsure of whether or not the insured’s policy will cover a rental car accident, this article should help you figure out if the accident should be covered. Here are some steps to take if you find yourself in this situation: 

1. Look at the Insurance Policy.

It may seem obvious, but an adjuster’s first step should always be to review the insurance policy to see what is and what is not covered. It is important to note courts have held that an insurance company must provide personal injury protection (PIP) coverage only if the policy explicitly includes it. Simply put, if the policy does not explicitly say something is covered, then it is not covered.  

If you are still unsure of whether or not the claim should be covered, here is a good example from a recent court case: Progressive’s policy stated that the rental car was not a “covered vehicle,” which is defined as, “any vehicle shown on the Declarations Page, unless the insured asked to delete that vehicle from the policy, any additional vehicle on the date the insured becomes the owner, or any replacement vehicle on the date the insured becomes the owner.” See Progressive Exp. Ins. Co. v. Devitis, 924 So. 2d 878, 880 (4th DCA 2006) for reference. In this case, the Court held the claimant was not riding in a covered motor vehicle as defined in the policy, thus, she was not entitled to PIP benefits under the policy. 

Reading the policy language carefully is an essential protection against paying for benefits that should not have been covered. If reading the policy leaves you with questions, I am here to help. Do not hesitate to call me if you are unsure about what to do.  

2. Evaluate the Language of the Policy. 

This step goes hand in hand with Step One, but it is a little different in that Step One focuses on the language already in the policy, whereas Step Two focuses on language that should be in the policy. This may sound confusing after reading that coverage should only be provided if expressly provided for by the policy, but the example below will help clarify:  

A Florida court found State Farm’s policy did not exclude coverage for cars that were rented rather than leased; therefore, the insurer was responsible for coverage. See Budget Rent-A-Car Systems, Inc. v. State Farm Mut. Auto. Ins. Co., which emphasizes that if an insurance company wishes to exclude coverage for certain risks, it must do so with explicit language in the policy.  

In other words, if an insurer wishes to exclude rental cars altogether, it must include explicit, detailed language in the insurance policy outlining exactly what is excluded. What this means is that, as an adjuster, you must first look to see what is included in the policy, and then determine was has been expressly excluded. If you follow those simple guidelines, then you should have a better outlook on coverage.  

3. Shifting the Burden

If there is a dispute over insurance coverage, the language of the rental agreement can be critical. Florida courts have held that the rental car company will have primary coverage if an agreement is signed detailing that the insurer will not assume liability. This may seem straightforward: the agreement says the insurer will not assume liability, so the injured party’s recovery should be dictated by the rental agreement, right? Well, that’s not always the case.  

In some cases, the burden can shift from the rental company to the insurer. When does the burden shift? There are certain requirements every adjuster should look out for to ensure the burden does not shift to the insurance company. Let’s look at the following case for an example: 

In this case involving State Farm, the court held a rental company can shift the burden to the insurance company if the rental or lease agreement states otherwise in at least 10-point type on its face. Also, certain specific language must be included, such as, “the valid and collectible liability insurance and personal injury protection insurance of any authorized rental or leasing driver is primary for the limits of liability and personal injury protection coverage required by ss. 324.021(7) and 627.736, Florida Statutes.” See State Farm Mut. Auto Ins. Co. v. Lindo’s Rent-A-Car, Inc., for more details.  

4. Understand the Difference Between Case Law and the Policy

It is important to note that case law may differ from the language in your insurance policy. In some cases, a court may find that a policy provides coverage even if it does not explicitly include certain language required by the statute.  

This case makes it clear that the law is never really that clear. Statutes are always being changed and interpreted differently by the courts. Therefore, practitioners and adjusters alike must constantly be up to date on the ever-changing law landscape. While this may sound like a tall order, there is no need to worry. We are here to help. We make it our business to keep you informed on the latest changes throughout the legal landscape.  

Conclusion 

When determining if coverage should be provided for a rental car, understanding the policy of insurance coverage and the requirements of the rental agreement can help you navigate any potential disputes. Always review the insurance policy carefully, evaluate the language of the policy, and consider the rental agreement to determine who is responsible for insurance coverage in the event of an accident. These are the best steps to determine if your insurance company will cover an accident in a rental car.  

Don’t stress if you are unsure of whether coverage should be provided. I am here to help at any time. For assistance in making the best decision in your case, call me at (954) 370-9970 or email me at rbecker@kelleykronenberg.com  

Ryan A. Becker
Attorney, Personal Injury Protection Defense
Kelley Kronenberg-Fort Lauderdale, FL.
(954) 370-9970
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