ELRAC v. Manzo

QUEENS COUNTY
Insurance Law

New York Law Journal

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Judge Richard Latin

Manzo rented a vehicle from ELRAC in which she agreed to be the only authorized driver, other than her spouse. The rental agreement noted in the event ELRAC was compelled to make payments to third parties due to Manzo's negligence, it was entitled to seek full indemnification from her. Manzo's son was involved in a collision with another vehicle after she loaned him the car, and ELRAC had to pay the other driver for personal injuries and property damage. It sued Manzo to enforce the indemnification portion of the agreement to recover $14,277.06. Manzo claimed indemnification was permitted only as to amounts in excess of the statutory minimum coverage required by Vehicle and Traffic Law §370. The court agreed finding the indemnification clause was unenforceable against a lessee to the extent that damages did not exceed the minimum statutory insurance requirements. It stated allowing ELRAC to pass the risk of loss from itself onto the renter for permissive use of a vehicle would permit it to "eviscerate the very coverage which it was statutorily required to provide." Also, ELRAC never disclaimed coverage as to the permissive user, and made payments for both personal injury and property damage to the other driver, thus it could not maintain this action.

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