Massachusetts Court on when a Rental Car Driver’s Insurer Must Reimburse Rental Company for PIP Benefits Paid to Injured Passengers

Insurance policies provide us with protection in the event of a Massachusetts personal injury accident, but they can be incredibly confusing. Conflicts often arise after an accident when it comes to determining which policies will apply, whether the injured party is entitled to the full policy limits and whether another insurer can assert a subrogation claim against a party who received insurance policy proceeds on top of recovery from another source. Our diligent car accident lawyers have handled numerous claims involving complex insurance disputes and we are ready to help you fight for the settlement or judgment that you deserve.

In the recent case of Enterprise Rent-a-Car Company of Boston, Inc. v. Arbella Mutual Insurance Company, a Massachusetts appellate court considered whether the self-insurer owner of a rental car can assert a subrogation right under a Massachusetts statute against the insurance carrier of the person who operated the vehicle to recoup personal injury protection benefits that it paid.

The driver rented a car from the plaintiff and was involved in an accident while operating the rental car resulting in injuries to him and the three passengers who were in the vehicle. The rental car company paid over $15,000 in personal injury protection (PIP) benefits to the passengers. The rental company then filed a motion seeking to compel arbitration on the issue of whether it could seek subrogation from the renter’s insurer or the other driver’s insurer. The renter’s insurer moved for summary judgment and the lower court granted the motion on the basis that it was the renter’s personal insurer and should not be required to pay for the PIP benefits to the passengers.

After additional proceedings, the rental company appealed on several grounds, including the argument that it was entitled to subrogation benefits from the renter’s insurer. The appellate court started by noting that Massachusetts law requires rental car companies to pay PIP benefits to passengers of the vehicles that it rents.

Reviewing the applicable statute governing PIP benefits, the appellate court agreed with the rental company. According to the law, a subrogation claim can only be granted where the renter was at-fault for the accident. It rejected the renter’s argument that this interpretation of the statute would absolve rental car companies from providing PIP benefits. Some renter’s who cause accidents may not have auto insurance policies, and there will be many instances in which the renter is not at fault for the crash.

Had the renter in the case at hand not been at fault for the crash, the rental car company’s insurer would not have been permitted to enforce a subrogation claim against it to recoup the PIP benefits that it paid to the renter’s passengers.

At the Law Office of Michael O. Smith, we know how frustrating it can be to find yourself involved in a car accident. Insurance companies do not always have your best interests in mind. Understanding the terms of a policy and how to proceed is challenging for almost every driver, which is why we offer a free consultation to discuss your situation and whether we can help you secure the outcome that you deserve. Call us now at 617-263-0060 or contact us online to get started.

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