Auto Insurance Claims: liability of lienholder, transportation equity act, criminal wrongdoing

Question
Hello,  Our company has recently terminiated an employee.  The employee is listed on the title as registered owner and our company is the lienholder.  The ex-employee refuses to give up the vehicle.  Our concern is, where do we go to get insurance on the vehicle.  I don't know if this employee will do something "crazy" with the car, last I heard, it is being kept in the garage.  To protect the company, I believe we need to have some kind of insurance.  If I tell our company's insurance provider the situation, they might not want to insure the vehicle as they don't know what this individual's liability is.  (Note that we have hired an attorney regarding this situation)  Is there a specific kind of insurance or is their an insurance company that handles this type of situation?

Answer
Sam,

If you are in the business of leasing or financing vehicles than you have no liability pursuant to a recent Federal Law commonly referred to as Graves Amendment.  Enacted on August 10, 2005, this amendment to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ("SAFETEA") provides in relevant part that:

   [a]n owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if-

   (1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and

   (2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner).  49 U.S.C. § 30106(a).

The Graves Amendment applies to all actions commenced on or after August 10, 2005, even if the conduct or harm occurred before the enactment date.  This legislation was passed in an attempt to protect leasing companies from the liability of the lessee of the car.

In most states (even without the Graves amendment) there's no liability placed on the lessor of the car based solely on the lessee's actions so you're probably covered anyway.  But you should absolutely check with your attorney.

If you want to be careful, you can speak to your insurance broker and simply add the specific vehicle to your corporate auto or umbrella policy.  I don't think your broker will have a problem with simply adding another car.

Best of luck and I hope this helps.

-Ernest Ferraro