The following is one sample state section from Claims Involving Rented Vehicles. The CD-ROM includes a complete overview of rental vehicle issues for all 50 states and the District of Columbia, including statutes, cases, Attorney General Opinions and tips from the author.



NEW MEXICO

Claims Involving Rented Vehicles


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A. Primary vs. Excess Liability.

  1. All Vehicle Owners Primary
    2.
B. Was the Rental Transaction Valid?.

  1. The Rental Agreement; Damage Waivers.
    2.
  2. Is This a Claim for Injury to a Child in the Rented Vehicle?
    3.
  3. Is This a Claim for Injury to an Adult in the Rented Vehicle?
    4.
  4. Was This a Rental to a Public School?
    5.
  5. The New Mexico Unfair Practices Act.
    6.
C. Physical Damage, Theft, Vandalism and Loss of Use.

  1. Recovery of Physical Damage Not Regulated.
    2.
  2. Loss of Use; Administrative Fees
    3.
  3. Diminished Value.
    4.
D. Authorized Driver/Permissive User Issues.

E. Loaner Vehicles/Garage Policies vs. PAPs.



A. Primary vs. Excess Liability.

  1. All Vehicle Owners Primary

    **NEW IN THIS EDITION (Q1, 2002)** For the period June 15, 2001 to May 15, 2002 all vehicle owners had to have primary liability insurance. Effective May 15, 2002 a New Mexico statute removes the burden of primary liability on all owners of motor vehicles, whether the owners self-insure or purchase insurance policies. N.M. Stat. Ann. §59A-32-23 was signed into law March 5, 2002 to become effective May 15, 2002. This puts New Mexico in the group of states in which both the rental company liability policy and the policy of the renter are likely to be excess.

    However, Title 13 New Mexico Administrative Code remains in effect. It states that self-insured vehicle rental companies can shift primary liability for at least minimum financial responsibility limits to the renter simply by prominently disclosing that fact on the face of the rental contract. 13 NMAC 12.4.16

B. Was the rental transaction valid?

  1. The Rental Agreement.

    Damage Waivers. New Mexico requires that all rental agreements which offer damage waivers contain a disclosure stating that the customer's personal auto policy may cover damage to rental vehicles. If the rental company confirms that the customer has coverage, the rental company will be required to process the claim through the customer's insurer. The rental company may not refuse to present claims to, or negotiate with, the customer's insurer. N.M. Stat. Ann. §59A-32-20.

    Penalties for Violating N.M. Stat. Ann. §59A-32-20. No penalty is specified in §59A-32-20 for a rental company's failure to include the required CDW disclosure in its rental agreement.

    Partial Damage Waivers. Waivers that hold the renter responsible for a portion of the damage to the vehicle are permitted.

  2. Is This a Claim for Injury to a Child in the Rented Vehicle?

    New Mexico does not require that rental companies provide child safety seats or inform the renter about safety seat requirements. New Mexico requires that children under the age of 1 be transported in safety seats that meet federal standards (49 C.F.R. §571.213). Children between ages 1 and 5 must be placed in a safety seat, or in a seat belt in the back seat. Children between ages 5 and 11 must be secured by a seat belt (in any seat). N.M. Stat. Ann. §66-7-368.

    3.
  3. Is This a Claim for Injury to an Adult in the Rented Vehicle? 

    The driver and each front seat occupant of a passenger vehicle must wear properly fastened seat belts manufactured in compliance with the provisions of the Code of Federal Regulations, Title 49, Section 571.208, whenever the vehicle is in motion. N.M. Stat. Ann. §66-7-372.

  4. Was This a Rental to a Public School?

    Federal Law (Applies Only to Public Schools)

    It is a violation of federal law to Aintroduce into commerce@ any new vehicle by purchase, lease or rental to a public school to be used to transport school children, unless it was manufactured according to federal school bus safety regulations. 49 U.S.C.A. §30112.

    New Mexico Laws on Van Rentals to Schools

    State Board Regulations on Transportation of Students
    9.11.1, School Activity Vehicles

    Definitions: 

    • "Minivan" is defined as a van designed to carry 10 persons or fewer, including the driver.

    • "Passenger van" is defined as a van designed to carry 11-15 persons, including the driver.

    • "School" is defined as a public school, grades 1-12. 

    • "School related activities" are defined as interscholastic athletic or other interscholastic or school sponsored activities, excluding transportation to and from school for the school day.

    • Used minivans may not be rented to schools for the transportation of students in connection with public school related activities or as transportation to and from the public school day. 

    • Used 15-passenger vans may not be rented to school districts to transport students to and from the school day or in connection with school related activities. New Mexico law states that any vehicle with a capacity of 11-15 passengers, including the driver, used to transport students to and from the school day or in connection with school related activities must comply with all applicable federal and state regulations for school buses.

  5. The New Mexico Unfair Practices Act. 

    The New Mexico Unfair Practices Act, N.M. Stat. Ann. §57-12-2, applies to vehicle rental transactions. 

C. Physical Damage, Theft, Vandalism and Loss of Use.

  1. Recovery of Physical Damage Not Regulated.

    There is no specific New Mexico statute that limits the amount a rental company may recover for physical damage to the rented vehicle. The terms of the rental agreement will control.

  2. Loss of Use; Administrative Fees.

    The prevailing rule is that loss of use may be recovered for damage to a rental vehicle for the period necessary for the vehicle to be repaired.


    Restatement of Torts § 928(b): “Where a person is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for: a) the difference between the value of the chattel before the harm and the value after the harm, or at the plaintiff’s election, the reasonable cost of repairs or restoration where feasible, with due allowance for any difference between the original value and the value after repairs, and b) loss of use.”

    The following cases stand for the proposition that loss of use is recoverable. Hannah v. Brown, 400 So. 2d 410 (Al. Civ. App. 1981); Alford v. Jones, 531 So. 2d 659 (Sup. Ct. Al. 1988); Airborne v. Denver Air Center, 832 P.2d 1086 (Col. App. 1992); Anderson v. Gengras Motors, 109 A.2d 502 (Conn. 1954); Badillo v. Hill, 570 So. 2d 1067 (Fla. 1990); Lamb v. R.L. Mathis, 359 S.E.2d 214 (Ga. 1987); Persinger v. Lucas, 512 N.E. 2d 865 (Ind. 1987); Long v. McAllister, 319 N.W.2d 256 (Iowa 1982); Nolan v. Auto Transporters, 597 P.2d 614 (Kan. 1979); Romco v. Broussard, 528 So.2d 231 (La. 1988); Russell v. Fleming, 2000 Minn. App. LEXIS 165; Hoodenpile v. Schneider Bailey, 748 S.W.2d 683 (Mo. 1988); Lenz Construction v. Cameron, 674 P.2d 1101 (Mont. 1984); Chlopek v. Schmall, 396 N.W.2d 103 (Neb. 1986); Camaraza v. Bellavia Buick, 523 A.2d 669 (N.J. 1987); Hubbard v. Albuquerque Truck Center, 958 P.2d 111 (N.M. 1998); Mountain View v. Storms, 476 N.Y.S.2d 918 (1984); Martin v. Hare, 337 S.E.2d 632 (N.C. 1985); Kreiner & Peters v. Pirman, 2000 Ohio App. LEXIS 3273; Kinter v. Claverack, 478 A.2d 858 (Pa 1984); Hutson v. Cummins, 314 S.E.2d 19 (S.C. 1984); Tire Shredders v. ERM, 15 S.W.3d 849 (Tenn. 1999); Castillo v. Atlanta Casualty, 939 P.2d 1204 (Utah 1997); Ackerman v. Glens Falls Insurance, 435 P.2d 31 (Wash. 1967); Kim v. American Family Mutual Insurance, 501 N.W.2d 24 (Wis. 1993); Farmers Home Administration v. Redland, 695 P.2d 1031 (Wy. 1985).

    However, the NAAG Guidelines limit the recovery of loss of use by stating that a rental company’s utilization rates must play a part in determining what amount may be collected. The NAAG Guidelines language is as follows: “In essence, the amounts charged must bear a direct relationship to the company’s loss as a result of the damages to the vehicle. These losses may include costs in addition to the actual cost of repair (e.g. for administrative costs or loss of use of the vehicle) so long as the company can substantiate that the amounts charged for these costs represent real losses. For example, claims made for loss of use must be based on reasonable estimates of time required for repair or replacement of damaged parts. These estimates can be based on estimating guides generally used in the vehicle repair business and commonly known as ‘crash books’ or other relevant repair experience. Utilization rates and rental charges must reflect a reasonable estimate of the actual income lost from failure to have the vehicle available for use. For example, it would not be acceptable for a company with a 50% utilization rate to charge 100% of the applicable rental rate for loss of use. Administrative fees may not exceed the reasonable administrative costs associated with processing damage claims.”

  3. Diminished Value.

    The usual measure of damages for damage to personal property is the difference in market value before the damage occurred and market value after the damage occurred. Proof of diminished value after repair of a vehicle is difficult as best. Budget v. Helies, 954 P.2d 812 (Or. 1998); Therefore, it may be necessary to sell the vehicle in its damaged condition in order to establish its post-crash market value.

    The Restatement of Torts § 928(a) states that an owner of personal property is entitled to recover diminution of value of a damaged rented vehicle that has been repaired. § 928 states: “Where a person is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for: a) the difference between the value of the chattel before the harm and the value after the harm, or at the plaintiff’s election, the reasonable cost of repairs or restoration where feasible, with due allowance for any difference between the original value and the value after repairs.” 

    Commentators like Dobbs and McCormick also support the recovery of diminished value for a damaged vehicle. Dobbs wrote: "There seems no warrant at all for insisting that the owner content himself with the repair costs if they are less than the depreciation, provided depreciation can be and is adequately proven. However satisfactory the repairs may be in, say, the operation of a car, the owner may quite possibly find that the trade-in value of his car is less when he seeks to purchase a new automobile, or that its cash sale value is less throughout the immediate life of the car. If this sort of depreciation is real, and can be established, there seems no reason at all to deny full compensation by limiting recovery to cost of repairs." D. Dobbs, Remedies, § 5.10, at 380 (1973). McCormick wrote: “If the damaged property is reasonably susceptible to repair, the owner may recover the reasonable cost of repair, plus the difference between the value of the property before the injury and after the repair, unless the value is enhanced, in which the event the increase in value would be deducted from the cost of repair.” McCormick, Law of Damages (1935 Edition) § 124.

    The following states allow recovery for diminution in value of a damaged vehicle. Farmers Insurance v. R.B.L. Investment, 675 P.2d 1381 (Ariz. 1983); Trujillo v. Wilson, 189 P.2d 147 (Col. 1948); Airborne v. Denver Air Center, 832 P.2d 1086 (Col. App. 1992); McHale v. Farm Bureau Mutual Insurance Company, 409 So. 2d 238 (Fla. 1982); Perma Ad Ideas v. Mayville, 282 S.E.2d 128 (Ga. 1981); Trailmobile Division v. Higgs, 297 N.E.2d 598 (Ill. 1973); Wiese-GMC v. Wells, 626 N.E.2d 595 (Ind. 1993); Halferty v. Hawkeye Dodge, 158 N.W.2d 750 (Iowa 1968); Long v. McAllister, 319 N.W. 2d 256 (Iowa 1982); Gary v. Allstate, 250 So.2d 168 (La. 1971); Orillac v. Solomon, 765 So.2d 1185 (La. 2000); Fred Frederick v. Krause, 277 A.2d 464 (Md. 1971); Hubbard v. Albuquerque, 958 P.2d 111 (N.M. 1998); Rosenfield v. Choberka, 529 N.Y.S.2d 455 (1988); Budget v. Helies, 954 P.2d 812 (Or. 1998); Newman v. Brown, 90 S.E.2d 649 (S.C. 1955); Averett v Shircliff, 237 S.E.2d 92 (Va. 1977).

D. Authorized Driver/Permissive User Issues.

A person who uses a rented vehicle with the renter’s permission, but who is not named on the rental agreement, is not an authorized driver, and rental companies are not liable for damages caused by unauthorized drivers. Cordova vs. Wolfel and National Car Rental, 903 P.2d 1390 (1995) Supreme Court of New Mexico.


E. Loaner Vehicles/Garage Policies vs. PAPs.

**NEW IN THIS EDITION (Q1, 2002)** Effective June 15, 2001 the insurance of drivers of loaners or demos from automobile dealers is primary, and the dealers’ insurance is secondary, provided the following disclosure is signed by the customer N.M. Stat. Ann. §59A-32-23, signed into law April 2, 2001 to become effective June 15, 2001:

    In consideration of our entrustment of the loaner Vehicle to You, You agree that Your vehicle insurance or self-insurance coverage is primarily responsible for any loss or damage caused by or to the Vehicle.

    __________________________________
    Your signature