A wreck in a rental car brings in a layer of required coverage that exists because of the rental business. North Carolina sets that layer in G.S. 20-281 and the uninsured and underinsured rules in G.S. 20-279.21. The sections below take the rental statute and its minimums, a table by who you were in the wreck, the federal rule on the rental company itself, self-insurance and bonds, your own uninsured and underinsured coverage, and then meeting an attorney.
G.S. 20-281 makes the rental company insure the renter
G.S. 20-281 makes it unlawful to engage in the business of renting or leasing motor vehicles to the public for operation by the rentee or lessee without the insurance the section requires. The policy has to come from an insurance company duly licensed to sell motor vehicle liability insurance in North Carolina.
The G.S. 20-281 policy insures the owner and the rentee or lessee, along with their agents and employees while in the performance of their duties. It covers loss from liability imposed by law for damages because of bodily injury to or death of any person, including damages for care and loss of services. Injury to or destruction of property caused by accident arising out of the operation of the rented vehicle is covered too.
G.S. 20-281 does not say whether the rental company's coverage pays before or after a renter's personal policy.
G.S. 20-281 puts the renter inside the rental company's required coverage. That first layer exists because of the rental business and does not depend on the renter owning a car.
Renter, passenger or the driver it hit, and whose insurance answers
Whose insurance pays after a North Carolina rental car wreck depends on who caused it and then on where the injured person was. The table sorts the claim by both.
| Who you are | Who caused the wreck | Liability coverage the claim goes against | Your own coverage when that falls short |
|---|---|---|---|
| The renter, hurt | Another driver | The other driver's liability insurance. G.S. 20-279.21(b)(2) sets the required limits of an owner's policy at $50,000 per person, $100,000 per accident and $50,000 for property | Uninsured motorist coverage under G.S. 20-279.21(b)(3) when the other vehicle is uninsured, and underinsured coverage under (b)(4) when its limits total less than your damages |
| A passenger in the rental | The renter | The rental company's G.S. 20-281 coverage, which insures the renter | Underinsured coverage under G.S. 20-279.21(b)(4) on a policy that insures you, when the applicable limits total less than your damages |
| A passenger in the rental | Another driver | The other driver's liability insurance under G.S. 20-279.21(b)(2) | Uninsured or underinsured coverage under G.S. 20-279.21(b)(3) and (b)(4) on a policy that insures you |
| Someone the rental hit | The renter | The rental company's G.S. 20-281 coverage, which insures the renter | Underinsured coverage under G.S. 20-279.21(b)(4) on your own policy when the applicable limits total less than your damages |
The renter's personal auto policy is left out of the liability column on purpose. No statute cited in this post decides when a renter's own policy covers a rented car.
When the other driver lives in another state, the post on suing an out-of-state driver covers reaching that driver. The car accident page covers the North Carolina liability minimum in more detail.
Find your row by where you were and who caused the wreck. The liability column names the coverage that answers for the driver at fault.
Is the rental company liable just because it owns the car?
Federal law, 49 U.S.C. 30106(a), says a rental company with no negligence or criminal wrongdoing on its part is not liable under the law of any State for harm during the rental period by reason of being the owner. The rule covers harm to persons or property that results or arises out of the use, operation or possession of the vehicle during the rental or lease.
The two conditions in 49 U.S.C. 30106(a)
The protection in 49 U.S.C. 30106(a) applies when the owner, or an affiliate of the owner, is engaged in the trade or business of renting or leasing motor vehicles. It also requires that there be no negligence or criminal wrongdoing on the part of the owner or the affiliate.
Exception. 49 U.S.C. 30106(a)(2) withholds the ownership protection when there is negligence or criminal wrongdoing on the part of the rental company or its affiliate. The rule reaches only liability that rests on ownership alone.
State financial responsibility laws that 49 U.S.C. 30106(b) keeps
49 U.S.C. 30106(b) says nothing in the section supersedes State law imposing financial responsibility or insurance standards on the owner of a motor vehicle for the privilege of registering and operating it. Subsection (b) also leaves in place State law imposing liability on rental businesses for failure to meet the financial responsibility or liability insurance requirements under State law.
Section 30106 does not name G.S. 20-281 or any other State statute. I read the federal rule and the State insurance requirement side by side.
I read the federal rule and the State insurance requirement side by side.
Self-insurance or a bond can stand in for the policy
G.S. 20-281 lets a rental company qualify as a self-insurer under terms prescribed by the North Carolina Commissioner of Motor Vehicles, or give bond with personal or corporate surety under G.S. 20-279.24, in place of the insurance policy.
An insurance policy
The policy comes from an insurance company duly licensed to sell motor vehicle liability insurance in North Carolina. It insures the owner and the renter at the G.S. 20-281 minimums.
Self-insurance or a surety bond
The company qualifies as a self-insurer on the Commissioner's terms or gives bond under G.S. 20-279.24. The bond stands in lieu of the policy.
What a G.S. 20-279.24 bond has to pay
G.S. 20-279.24(a) says the bond is conditioned for payments in amounts and under the same circumstances as would be required in a motor vehicle liability policy.
G.S. 20-279.24(b) covers a judgment against the principal on the bond that is not satisfied within 60 days after it has become final. The judgment creditor can then bring an action in the name of the State against the company or persons who executed the bond.
Uninsured motorist coverage on your own policy, in someone else's car
G.S. 20-279.21(b)(3) bars delivering a bodily injury liability policy in North Carolina for a vehicle registered or principally garaged here unless it provides uninsured motorist coverage. That coverage protects persons insured under the policy who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury.
Who counts as a person insured under G.S. 20-279.21(b)(3)
G.S. 20-279.21(b)(3) defines persons insured as the named insured and, while resident of the same household, the spouse of any named insured and relatives of either, while in a motor vehicle or otherwise. The same definition adds any person who uses the motor vehicle to which the policy applies with the named insured's consent, and a guest in that vehicle.
The definition lists the named insured and resident family members without tying them to the car on the policy. The permissive driver and the guest are listed by reference to the motor vehicle to which the policy applies.
| The other vehicle's situation | Treated as uninsured |
|---|---|
| No bodily injury and property damage liability insurance in at least the amounts in G.S. 20-279.5(c) | Yes |
| Insurance exists but the company writing it denies coverage or has become bankrupt | Yes |
| The liability insurer is unable to make payment within its limits because of insolvency | Yes |
A renter with a policy at home, and a passenger with one, each have that policy's own persons insured definition to check.
When the limits run out, underinsured coverage under G.S. 20-279.21(b)(4)
G.S. 20-279.21(b)(4) requires underinsured motorist coverage in addition to the liability and uninsured coverage in subdivisions (2) and (3). An underinsured highway vehicle is a highway vehicle for which the sum of the limits under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the total damages sustained by an individual seeking payment of benefits.
G.S. 20-279.21(b)(4) says the provisions of subdivision (3) apply to underinsured coverage. The persons insured definition covered above carries over.
Compare the limits with the damages
Add up the limits under all bodily injury liability bonds and policies applicable at the time of the accident. Underinsured coverage comes into the claim when that sum is less than the total damages.
Exhaust the liability coverage
Exhaustion occurs when the per-claim limits have been paid or tendered. With multiple claims it occurs when the aggregate per occurrence limit has been paid or tendered.
Underinsured coverage starts at the next dollar
Underinsured coverage applies to the first dollar beyond amounts paid under the exhausted liability policies. The amount is not reduced by a setoff or credit against any coverage, including liability insurance, except workers' compensation coverage to the extent subsection (e) provides.
A named insured can purchase greater or lesser limits under G.S. 20-279.21(b)(4). The subdivision does not require any insurer to sell underinsured coverage above $1,000,000 per person and $1,000,000 per accident.
Exception. G.S. 20-279.21(b)(4) says a highway vehicle is not an underinsured motor vehicle for a claim under an owner's policy insuring that same vehicle unless that policy's underinsured limits are greater than its bodily injury liability limits.
Meeting an attorney after a rental car wreck far from home
Wherever you are in North Carolina, I can come to you. The first contact is a phone or video call. After that I meet you in person where you are. Whether we work together is decided in that meeting.
The how it works page lays out that sequence, and the contact page is where to ask for the first call. A visitor still on the coast can read the Cape Fear page on meeting at a rental house.
Three years under G.S. 1-52, wherever you went home
G.S. 1-52(5) gives three years for an action for injury to the person not arising on contract. Under G.S. 1-52(16) a personal injury claim does not accrue until bodily harm to the claimant becomes apparent or ought reasonably to have become apparent, whichever event first occurs.
Where the case is filed is a separate question, because G.S. 1-82 ties venue to the county where a plaintiff or defendant resides when the action begins. The post on an injury in a county where you do not live covers that.
Wherever you are in North Carolina, I can come to you.
