In a previous blog post, we noted how the concept of vicarious liability is the reason we can no longer rent from Tilden Rent A Car. Courts in many nations have since ruled that the liability of rental car companies for actions of drivers is routinely limited, especially when drivers make egregious deviations from the law. That's the case in New Zealand, where a story recently made global news after a head-on collision caused by a tourist resulted in financial harm to a local resident. The tourist fled the country and the local resident (of course) blamed the rental car company instead. When condensed, the New Zealand story is a simple one of insurance and has lessons for all rental car users, both domestically and abroad.
New Zealander Lorde has a song aptly named "Liability" on her newest album.
The story comes out of Kaikoura, site of the major 2016 earthquake. Tourist Ludovic Le Roux from Luxembourg, driving a vehicle from Happy Campers on the wrong side of the road, hit the local head-on by continuing even further from the proper side of the road onto the shoulder. The tourist then left the country and didn't provide any information to settle the claim. So at this point, we can infer:
- The management of Happy Campers are not happy campers and Mr. Le Roux is on their Do Not Rent List,
- New Zealand Immigration probably won't let Mr. Le Roux come back to the country (despite the Luxembourg visa waiver),
- Responsibility for damages to Happy Campers and the local resident are attributable to Mr. Le Roux, and
- Mr. Le Roux is probably invoking his "Right to be Forgotten" by Google (for career and reputation purposes).
What Should All Renters Know Before Signing a Contract?
We've noted before rental agreements are contracts -- a renter is always responsible for knowing the contract terms before signing. After all, you wouldn't allow a stranger to borrow your car, boat, RV, home, etc. without some assurance that you would be made whole if an incident occurred! Insurance when traveling the world is not a given. Even in the United States, although rental car companies in 49 states (and the District of Columbia) provide basic liability insurance in a rental car per law, California rental cars come with zero liability insurance (and a driver without a personal liability policy is considered to be uninsured when driving a rental in California).
We address many other insurance topics in our Quick Primer on Rental Car Insurance but renters should always know the answers to three insurance-related questions before renting a car:
- "What happens if I damage the rental vehicle?"
- "What happens if I cause harm to other individuals or property?"
- "What happens if occupants of my vehicle get injured?"
Happy Campers would obviously have Mr. Le Roux's credit card information and would attempt to immediately bill him for the damage to the campervan, unless he had purchased specific insurance for the campervan. Yet the local resident with the totaled truck can't just attempt to bill Mr. Le Roux's credit card, despite clear evidence that Le Roux was at fault. So the local resident complained to the local media.
Insert TVNZ 1NewsNow's "Fair Go" Team
The local resident contacted the consumer advocacy "Fair Go" team, which relayed how Happy Campers is a profitable company and should pay for the damages to the local resident (despite compliance with national transport regulations). They even solicited a quote from the New Zealand Rental Vehicle Association about the common exclusion that insurance coverage doesn't apply if one's breaking the law.
“Most of the time unless there's a serious breach of traffic law, normal conditions of insurance coverage would apply ... Failing to give way, failing to keep left, not adjusting to the driving conditions - those things are part and parcel of driving a vehicle. It happens from time to time." -- Barry Kidd
We're glad Mr. Kidd doesn't represent the U.S. rental car industry! Although our blog frequently highlights consumer-unfriendly actions taken by rental car companies, this is a case where we have to side with the rental car company itself. Knicking a car in a parking lot or losing a vehicle in a blind spot is an accident -- we do not accept the idea that driving on the wrong side of the road and then exacerbating the problem by continuing onto the shoulder is just one of those "stuff happens" items. The tourist, Mr. Le Roux, easily could have ruined lives (and livelihoods) and is entirely at fault; a driver who can't intellectually process staying on the proper side of the road should return the rental vehicle and find an alternative! However, the media-shaming by the "Fair Go" team resulted in the owner of Happy Campers directly giving the local resident 3,350 NZD (just under $2,500).
Traveling anywhere in a rental vehicle? Study both the rental terms and conditions as well as any appropriate travel regulations (such as those mentioned in our Italy and United Kingdom guides). Then remember that roads are resources available to other drivers; if unwilling to accept the responsibility for damages or harm to the rental vehicle or other travelers in an accident, simply find another means of transport. After all, there are many countries we encounter (looking your way, Mexico) where Mr. Le Roux would have been immediately arrested and detained indefinitely by police until he had made appropriate reparations for the accident!