The U.S. lease financing company for Chrysler automobiles today threatened to pull out of Rhode Island as of Aug. 1 if the state allows a vicarious liability cap passed two years ago to expire on Thursday without being renewed.
A bill to extend the law is scheduled for a House vote today. At stake is not only Chrysler Financial’s continued presence in the state, but also Ford’s and Chase Manhattan’s, said Jack Perkins, executive vice president of the Rhode Island Automobile Dealers Association.
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Under the state’s vicarious liability law, the legal owner of a car can be held liable for any damages caused by the vehicle, even if the owner had nothing to do with the incident.
In 2002, the Rhode Island Supreme Court ruled that the law can be applied to car leasing and rental companies, and it went on to uphold a $28-million verdict against the Chase Manhattan Automotive Finance Corp. in a personal-injury case.
Fearing a string of such verdicts, leasing companies set out to get rid of unlimited vicarious liability provisions in every one of the few states that had them. New York resisted, and most leasing firms pulled out. Rhode Island offered a compromise that kept leasing firms here.
Under the law that expires Thursday, rental companies’ liability is capped at $250,000 per person or $500,000 per accident for injuries or death, and $25,000 for property damage.
Leasing companies aren’t held liable at all if their customer has insurance for at least $100,000, $300,000 and $50,000, respectively, and their liability is limited to the difference between actual coverage and those caps if the policy falls under those limits.
The caps expire next Thursday, however. The bill before the House today, H-2657, would extend them to all contracts signed by June 30, 2007. But resistance to the measure is strong – as evidenced, for starters, by the fact that the bill has been awaiting a vote since mid-April.
Now, Perkins said, leasing companies are concerned that legislators will amend the bill on the House floor to increase the liability caps. That would not be acceptable to them.
In a news release today, William F. Jones Jr., vice president of Chrysler Financial, focused on the broader issue of renewing the legislation, saying that if the caps expire, “Chrysler Financial will be forced to exit the Rhode Island leasing market based on significant financial exposure if we continue to offer leasing.”
Chrysler Financial pulled out of New York last year.
Perkins said he hoped legislators would “realize the seriousness” of the situation before casting their votes.
