BILL ANALYSIS Ó
AB 621
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 621 (Charles Calderon)
As Amended September 8, 2011
Majority vote
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|ASSEMBLY: |47-25|(April 7, 2011) |SENATE: |40-0 |(September 9, |
| | | | | |2011) |
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Original Committee Reference: JUD.
SUMMARY : Provides a mechanism for service of legal process on
non-residents who cause injuries involving rental cars in
California, up to a maximum contractual limit. Specifically,
this bill :
1)Provides that when a rental company enters into a rental
agreement in the state for the rental of a vehicle to any
renter who is not a resident of this country and, as part of,
or associated with, the rental agreement, the renter purchases
liability insurance, as defined, from the rental company in
its capacity as a rental car agent for an authorized insurer,
the rental company shall be authorized to accept, and, if
served as set forth in this subdivision, shall accept, service
of a summons and complaint and any other required documents
against the foreign renter for any accident or collision
resulting from the operation of the rental vehicle within the
state during the rental period. If the rental company has a
registered agent for service of process on file with the
Secretary of State, process shall be served on the rental
company's registered agent, either by first class mail, return
receipt requested, or by personal service.
2)Specifies that within 30 days of acceptance of service of
process, the rental company shall, provide a copy of the
summons and complaint and any other required documents served
in accordance with this subdivision to the foreign renter by
first class mail, return receipt requested.
3)Requires that any plaintiff, or his or her representative, who
elects to serve the foreign renter by delivering a copy of the
summons and complaint and any other required documents to the
rental company shall agree to limit his or her recovery
against the foreign renter and the rental company to the
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limits of the protection extended by the liability insurance.
4)Clarifies that, notwithstanding any other provision of law,
the requirement that the rental company accept service of
process pursuant this section shall not create any duty,
obligation, or agency relationship other than that provided.
5)Establishes a three-year sunset by which the bill will cease
to be operative on December 31, 2015.
The Senate amendments are technical and clarifying.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : None
COMMENTS : The author states that this bill will assist drivers
and the State of California by making sure that the insurance
that car renters buy can actually be relied upon as intended by
requiring the car rental company to be the agent for service of
process for claims against insured drivers who reside outside of
California.
The author explains the reason for the bill as follows:
Civil Code Section 1936 establishes the basic contractual
obligations between vehicle rental companies and their
customers and regulates a renter's liability for damage and
loss and financial responsibility requirements. California
law also requires all motorists to carry minimum liability
insurance of at least $15,000 per person and $30,000 per
occurrence for bodily injury. Further, renters have the
ability to purchase coverage through the car rental
company. Rental car companies sell various types of
insurance and waivers. Loss damage waivers (LDW) and
collision damage waivers (CDW) from the rental company
essentially take the place of the renters own collision and
comprehensive insurance. Some LDWs include CDW and some
waivers require payment of a deductible. These types of
insurance sales are very profitable for a car rental
company. Avis, for example, sells five kinds of coverage
and about 30% of renters at Enterprise Rent-A-Car buy some
type of insurance coverage. According to a 2007 National
Association of Insurance Commissioners (NAIC) study, 34% of
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consumers surveyed bought a rental car company's insurance.
Further, according to a national auto rental consultant,
sales of insurance are an "important profit center" for car
rental companies. Daily rates vary by type of car and
rental location, but a 2007 survey shows that loss damage
waivers sell from $8.95 to $35.99 a day, and supplemental
liability insurance sells from $8.95-$12.95 a day.
However, when a non-U.S. resident who rents a car causes a
car accident and injures a California resident it can be a
nightmare for the California resident to try to locate the
car renter and seek remedial action. For example, in San
Francisco, a Tibetan rented a car and purchased the
insurance sold by that company. The Tibetan caused a major
accident, leaving a California resident severely injured,
and left the U.S. In this case, the plaintiffs actually
had to hire a yak to get to the location of service. In
another actual case from Northern California, a CAOC member
is representing a police officer who was on duty riding his
department issued motorcycle when he was injured by a
German tourist who made an illegal turn causing the officer
to hit and flip over the tourist's rental car. The expense
and difficulty of complying with the Hague convention would
cause a serious burden to the police officer's recovery.
Under current law, service of process on out of country
defendants is complicated, expensive and difficult as 1)
the onerous provisions of the Hague Convention of 1965 On
the Service Abroad of Judicial and Extrajudicial Documents
in Civil or Commercial Matters must be met; 2) not all
countries have agreed to the Hague Convention; 3) the
paperwork must be translated into the language of the
defendant; and, 4) a service processor must be located.
The losers in the current situation are Californians who
are injured or killed by an out-of-state renter because the
case cannot proceed unless the defendant is properly
served. The State of California suffers as well because if
the defendant cannot be served and the case not processed,
the medical bills may often end up being paid by California
taxpayers.
The sponsor of the measure, Consumer Attorneys of California
(CAOC), argues that the bill will make sure drivers receive the
benefits of car rental insurance when injured by an out-of-state
or out-of-country driver.
AB 621
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According to CAOC, a problem arises where out-of-state renters
drive recklessly and injure or kill a California resident and
then leave the state. If a lawsuit ensues, the injured
California citizen then needs to locate, and serve, the out of
state resident. CAOC notes that because the rental car company
receives the benefit of issuing the insurance, and has the
capacity to obtain adequate information from renters in order to
locate them after an accident, it makes sense to require the
company to accept service in this very limited circumstance.
CAOC states that the Hague Convention process is inadequate
because not all countries have agreed to the Hague Convention.
Even where it applies, CAOC argues, the process is unacceptable
because the paperwork must be translated into the language of
the defendant and a service processor must be located. Such
onerous obstacles can be avoided, CAOC contends, if the rental
company simply accepts service of process on behalf of its
renter. They argue that the losers in the current situation are
Californians who are injured or killed by an out-of-state renter
because the case cannot proceed unless the defendant is properly
served.
CAOC also argues that the bill will help save the State of
California money, noting that when service of process cannot be
accomplished, California often suffers financially as well. If
the defendant cannot be served and the case not processed, the
medical bills may often end up being paid by California
taxpayers. Under the normal course of a lawsuit, the medical
bills would be repaid out of the lawsuit recovery to the state
in instances where it provides medical care. However, under the
current situation, if a defendant cannot be served, he or she
(and the insurer) avoid responsibility and the victim and the
state end up paying.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0002877