Lenders Abandon Auto Leasing
in New England States

"Vicarious Liability" statutes on the books in New York and Connecticut are responsible for the decisions of several major automobile lessors to halt auto leasing in those states. J.P. Morgan Chase is the most recent company to announce that it will stop writing leases in those states as of July 1. Earlier this spring, General Motors Acceptance Corp. and Ford Motor Credit made similar announcements. Chase is the largest auto lessor in those states outside of the manufacturer-owned auto finance companies.

The issue pertains to laws passed in the early 20th century that make leasing companies financially liable for damages and injuries sustained in traffic accidents involving cars they leased. New York, Connecticut and Rhode Island are the only states in the country that have unlimited liability for lessors. Florida has a vicarious liability law but limits the scope of the liability provision.

Chase stopped writing auto leases in Rhode Island last year after a jury returned a $28 million liability verdict against it in an accident case involving a vehicle which Chase had leased to a customer. Jeffrey Levine, general counsel for Chase Automotive Finance Corp., told the American Banker "the law is archaic, and absurd. We are leaving solely because of the vicarious liability laws. The minute—not the day—after they are repealed, we will be back."