It’s time for Congress to treat ride-share platforms like peer companies
Congress last passed surface transportation funding in the Infrastructure Investment and Jobs Act (IIJA) in 2021, and it is expiring on September 30, 2026. The IIJA, which cost $305 billion over five years, provides resources to improve highway and car safety and fund public transportation. There is a provision in this renewal known as the Graves Amendment that absolves a rental car company of liability if a rental car driver causes an accident. These protections can be expanded in the forthcoming surface transportation reauthorization to apply to peer-to-peer transportation (P2P) and ride-share platforms as well.
Extending the Graves Amendment’s protection of car rental firms to the ride-share market would benefit both the platforms and car owners. This change would prevent lawsuits against the ride-share company itself if a car owner who happens to be using the platform causes an accident. This would help to decrease fare costs for consumers seeking a ride, as it would prevent expensive litigation.
What is the Graves Amendment?
The Graves Amendment was originally enacted by Congress in 2005 as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The amendment effectively eliminated car rental company liability for accidents when the companies were not responsible.
Prior to passage of the Graves Amendment, one could sue a car rental firm for damages sustained in a driver-caused accident in most states. These states had what was called “vicarious liability,” which means imposing liability on someone for the actionable conduct of someone else. As surface transportation reauthorization approaches, Congress can extend the scope of this protection to cover P2P car-sharing platforms—a newer but now well-established industry. This would bring regulation in line with how the longstanding rental car industry is treated, as it makes sense that, in both cases, liability for accidents caused by a driver should rest with them, not the companies.
How did we get here?
The concept of vicarious liability began in the 1960s when there was a sea change in the legal landscape from negligence-based liability to strict, or vicarious, liability. Negligence-based liability requires the defendant to bear some responsibility for an injury, whereas strict liability is liability without fault.
The introduction of strict liability exacerbated the great liability insurance crisis of the 1970s and 1980s. Strict liability opened the door to all manner of lawsuits, whether frivolous or meritorious, especially for product liability cases. The plaintiff bar was awarded large awards from insurance companies, who were viewed by the plaintiff bar as having “deep pockets.” The impact of the introduction of strict, or vicarious, liability was catastrophic. There were sharp increases in the cost of liability insurance, where it was available. During this crisis, insurance premiums for daycare centers, asbestos removal firms, and physicians (especially obstetricians) more than doubled. Several insurance companies, including Mission Insurance, were bankrupted by the litigation storm.
Next steps
Approximately 30 states have since eliminated the legal basis for suing P2P car-sharing platforms. The upcoming surface transportation reauthorization also presents an opportunity to eliminate litigation against P2P platforms in other states as well. To override the patchwork of state laws regarding vicarious liability for P2P companies with a federal solution, Congress can lower costs for consumers in the fast-growing car-sharing market—which is increasing at 11 percent per year, rising from $9 billion revenue in 2025 to forecasted $21 billion by 2033.
Another reason P2P platform providers should not be responsible for driver negligence is that drivers are independent contractors, not employees of the platform, thereby not subject to vicarious liability. There are some exceptions, however, that could make the platform responsible. These include unsafe, inadequately maintained vehicles, sharing a vehicle with a driver who is underage, lacks a driver’s license, or is intoxicated.
As the text of the surface transportation reauthorization is finalized in coming months, policymakers should consider the needs of the novel P2P business model by modernizing regulations to be inclusive of this critical industry.
It has been 70 years since President Eisenhower signed the National Interstate and Defense Highways Act of 1956 into law. This was the legislation that authorized the building of the nation’s interstate highway system. It was the largest public works project in the country’s history. There is no better time than now to expand the current iteration of this historic bill by protecting this new business model from costly, unmerited litigation as its participants make use of the nation’s near 50,000 miles of interstate highways.