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The Tennessee legislature adopted Public Chapter No. 884 which was signed by Governor Bill Haslam on May 9, 2012. This bill amended T.C.A. § 55-10-311 to add a provision that eliminates the vicarious liability of automobile dealerships who provide loaner vehicles in certain circumstances. The pertinent amendment to the bill is T.C.A. § 55-10-311(b)* which now provides:
(b) Any automobile dealer who provides a loaner vehicle to a customer without charge while the customer's vehicle is being serviced or repaired by the dealer shall not be vicariously liable under any vicarious liability theory, to any person injured as the result of an accident caused in whole or in part by a customer driving a loaner vehicle provided by the dealer where the dealer was provided with proof of insurance by the customer prior to the customer being provided with the loaner vehicle.
This amendment to the statute eliminates vicarious liability for an automobile dealership that loans a car to a customer, without charge, while that customer’s automobile is being serviced or repaired. The only requirement for the elimination of vicarious liability is that the dealer must have received proof of insurance by the customer prior to the time that the customer was provided with the loaner vehicle.
T.C.A. § 55-10-312* was also amended by adding subsection (b) to the statute as follows:
(a) Proof of the registration of the motor-propelled vehicle in the name of any person shall be prima facie evidence of ownership of the motor propelled vehicle by the person in whose name the vehicle is registered; and the proof of registration shall likewise be prima facie evidence that the vehicle was then and there being operated by the owner or by the owner's servant for the owner's use and benefit and within the course and scope of the servant's employment.
(b) Subsection (a) shall not apply any automobile dealer who provides a customer a loaner vehicle without charge while the customer's vehicle is being serviced or repaired by the dealer. The dealer shall not be vicariously liable under any vicarious liability theory, to any person injured as the result of an accident caused in whole or in part by a customer driving a loaner vehicle provided by the dealer where the dealer was provided with proof of insurance by the customer prior to the customer being provided with the loaner vehicle.
Subsection (b) of this statute provides additional protection for automobile dealers that loan vehicles to customers. As a result, these statutes greatly reduce the potential liability for an automobile dealer in the “loaner” car situation. It is important to note that an automobile dealer can still be responsible for its own negligence when it loans a vehicle in this situation. For example, if the automobile dealer knew or should have known that the individual who loaned the vehicle was intoxicated or under the influence of drugs then the dealer could certainly still be responsible for its own negligence in loaning the vehicle despite this knowledge.
* The links to these statutes do not include the amendments as of the time of this posting. It is expected they will be updated soon.
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