SW Legal Educational Publishing

Lessor Has No Obligation to Ensure that Leased Vehicles Are Insured
Description Party injured by uninsured leased vehicle sued leasing company for failing to require lessee of vehicle to maintain proper liability insurance. Nebraska high court held that in long-term leases, by law the lessee is considered to be the owner of the vehicle and so has the obligation to maintain insurance.
Topic Insurance
Key Words Automobile Leasing; Automobile Insurance
C A S E   S U M M A R Y
Facts Wilburn leased a car from Rosen Auto Leasing. Rosen required proof of liability insurance on the vehicle when it was leased. Wilburn quit paying insurance premiums, so the coverage was cancelled, and Rosen was notified since it was designated as the loss payee on the policy. Rosen took no action when it learned of the insurance cancellation. The car was then involved in an accident that damaged Danler's car. Danler sued Rosen, alleging that Rosen had an affirmative duty, by virtue of the terms of the lease, which required the lessee to have insurance, and as a matter of law, to ensure that the lessee had insurance in force during the lease. The trial court dismissed the suit; Danler appealed to the Nebraska high court.
Decision Affirmed. Absent any relationship between a lessor of a vehicle and an injured third party, a lessor has no affirmative duty to insure that its lessee does not operate a leased vehicle without proper liability insurance coverage, even when the lessor knows that the lessee is operating the vehicle without insurance in effect. The lessee, who contracted to lease the vehicle for more than 30 days, is deemed its "owner" for purpose of obtaining insurance of registered vehicles; the lessor has no statutory duty to obtain or maintain an insurance policy on the vehicle.
Citation Danler v. Rosen Auto Leasing, Inc., 259 Neb. 130 (2000 WL 355522, Sup. Ct., Neb., 2000)

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