Expands protections afforded to renters of motor vehicles

Summary of specific provisions

(1) Makes changes throughout the law to clarify the use of the term "renter" and "authorized driver". A renter is the person or entity who entered into the contract with a rental vehicle company. An authorized driver is the renter, the renter's spouse, and any person noted on the contract as an additional driver. The respective rights and obligations of each are not always the same, yet existing law does not consistently reflect those differences.

((2) Amends § 396-z(1) to delete the confusing reference to "private passenger vehicle" currently relied upon in § 396-z(1)(e) to differentiate between commercial uses excluded from the provision and private passenger uses covered by the provision; and clearly specifies those commercial vehicles that are excluded from this statute.

(3) Amends § 396-z(2)(a) to reorganize the tiers for optional vehicle protection (OVP) to reflect current marketplace conditions. For the past ten years, the daily price of optional vehicle protection has been capped at $9.00 if the vehicle has an MSRP of not more than $30,000 and $12.00/day if the vehicle has an MSRP of more than $30,000. Under the new tier schedule, OVP will be capped at: $9 if the MSRP is not greater than $20,000; $12 if the MSRP is greater than $20,000 but less than $35,000; and $15 if the MSRP is greater than $35,000. The changes are necessitated by a combination of standard inflation over the past 10 years, changes in the manner by which rental cars are purchased from manufacturers, and the increased costs associated with repairing vehicles today. Moreover, under the pre-2004 statutory scheme, rental companies could not afford to rent cars worth more than $30,000. However, today, the healthy new rental environment makes vehicles available that can greatly exceed that amount, but which are not logically covered by the $12 cap - which is already only a fractional portion of the market cost of OVP (in the vast majority of states the market value of damage waiver is $18-$24/day, even for base-model cars. Under these amendments, approximately 85% of cars rented in New York would still fit under the $9 or $12 cap.

(4) Amends § 396-z(2)(d) to provide a means for a customer to terminate optional vehicle protection after 24 hours. Currently, the law only provides a mechanism for terminating the OVP within the first 24 hours of purchase.

(5) Amends § 396-z(3) to specify the right and obligations of a renter and rental vehicle company when a vehicle is "recovered" (instead of "returned") or returned during non-business hours. The current law only anticipates the situation where a vehicle is returned during normal business hours.

(6) Amends § 396-z(4)(e) to update the telephone disclosure requirement regarding optional vehicle protection. Current requirements have led to more confusion than clarification. This change recognizes that there are numerous optional products available for purchase, but provides that any discussion of OVP contain the information required by the statute.

(7) Amends § 396-z (4)(f) to clearly specify exactly what the rental vehicle company must disclose on signs or pamphlets regarding the consumers rights and obligations. Current law does not specifically indicate what information rental vehicle companies are required to disclose in the rental agreement and on clearly visible signs or pamphlets at the rental location making enforcement of disclosure compliance difficult.

(8) Amends § 396-z((5)to unravel currently-confusing language relating to the rights of a renter and/or the renter's insurance company to inspect a damaged vehicle, and the time periods controlling this process, while maintaining all the existing time periods or notice requirements of the existing provision.

(9) Amends § 396-z(6) to clarify that damages related to loss of use and administrative fees may not be assessed against a renter or authorized driver, but may be assessed against a negligent third party. Also adds clarity to, and removes redundancies from how a damage claim is presented to the customer's insurance carrier.

(10) Adds a new subdivision 16 to § 396-z to provide for the disclosure requirements to be delivered electronically when a customer utilizes a technology for the rental that bypasses the counter. More and more customers are using Internet programs or Apps to secure their rental vehicle, and as such, do not have to appear at the rental counter. This provision assures that the customer will still encounter the disclosures required under the General Business Law.

(11) Makes other technical and,clarifying provisions and removes redundancies throughout the statute.

Justification

Chapter 656 of the Laws of 2004 represents the very core or the relationship between rental car companies and New York consumers. For almost 10 years, this statute has allowed the rental car industry to grow in New York, while providing its customers with the most comprehensive set of consumer protections anywhere in the country. The results have proven beneficial for both the industry and the consumer; the industry as expanded into previously underserved areas, and robust competition between the various rental companies has provided consumers with a variety of affordable options. Moreover, sale of the damage waiver as an optional product is permitted, but subject to significant and comprehensive disclosure and education regarding the

consumer's options. As a result, the five-year trial was deemed a success and extended in 2008, and then again in 2013.

After ten years of working within the framework of Chapter 656, some of the requirements of the law have proven to be confusing for consumers and difficult to execute for the rental companies. Moreover, the statute has not kept up with technology advances in the delivery of the rental product. This measure clarifies some of its more ambiguous and/or unworkable provisions of the law to the benefit of the consumers and rental companies alike, while, at the same time, updating some of its provisions to reflect different delivery mechanisms.

Prior legislative history

New Bill

Fiscal implications

None

Effective date

The act will take effect immediately, and sunset on June 30, 2018.