NY High Court Limits Auto Rental Liability Insurance Requirement

Rental car companies under New York law must carry a specified minimum amount of insurance, although they aren’t required to provide liability coverage to renters under federal law, the state’s high court ruled.

The 4-3 decision narrowly held that federal law preempts sections of New York law, but doesn’t restrict the state’s “ability to require rental companies to obtain insurance, no matter what kind,” for registering and operating a vehicle, according to a Thursday opinion from New York Court of Appeals, affirming a lower court’s ruling.

The federal Graves Amendment preempts state laws—such as Section 388 of New York’s Vehicle ...