Shabbat Parashat Shemini | 5770

P’ninat Mishpat: Insurance Coverage of a Rental Car

(condensed from p’sak by Eretz Hemdah / Gazit Beit Din of Tzefat)

Case:  Def countersues for 26,000 shekels for the damage to the rental car. Def claim that pl refused to pay for “third party” damage insurance (pl denies this) and say that, in any case, an insurer is not obligated to pay for the type of gross negligence that caused the accident.  

Ruling: Normally, a renter is obligated to pay for damages that are caused to the object in his charge unless it was totally out of his control (oness). A driver who damages another car is similarly obligated. However, agreements between an object’s owner and the renter can make him obligated more than standard halacha or exempt him from payment (Bava Metzia 94a). Although some say that this does not include cases where the “watchman” actively did the damage (Ketzot Hachoshen 72:14), everyone agrees in a case where there is a written agreement that one’s damages are covered by insurance. The way insurance policies for damages are composed in our times, when insurance pays, the damager is exempt from paying.

There is factual disagreement between pl and def over whether third party damages were to be covered by insurance. Therefore, we will follow the written rental agreement that def presented to pl and pl signed. The agreement refers to insurance coverage and the exceptions for which pl will be responsible, including the deductible. This implies that pl was to expect that the basic insurance coverage is included in his rental fee. In addition, the law (which sets the basis of the accepted practice) requires licensed insurance companies to insure their cars for third party damage, as is the industry practice. If def decided not to provide insurance coverage and did not prove that they informed pl of this, def must pay themselves.

Regarding the claim that insurance does not have to pay for def’s negligence, the Attorney General’s office gave the following guidelines of when an insurer is exempt. One of three conditions must be met: 1. The insurance policy has an explicit condition that the driver must take steps to avoid accidents in order to be covered; 2. The driver was involved in gross (not merely, significant) negligence; 3. There was irresponsible behavior that displayed disregard for possible damage. These guidelines were presented to all major insurance companies, and it is thus assumed to represent industry standard. Since there is no proof that these conditions applied, def must see to it that dam be paid through their auspices, not by pl. If they fail to do so and dam’s legal efforts cause financial loss to pl, def will have to compensate pl.

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