Hertz Statements in Wake of Massive Settlement Foreshadow a Potential Coverage Spat

Last month, Hertz announced that it would pay $168 million to settle 364 claims alleging that it erroneously filed criminal reports against customers who did not return vehicles on time. While numerous publications have covered the salacious allegations from these reports, one of the more mundane details of Hertz’s latest announcement caught the eye of the Jaszczuk P.C. Insurance Recovery Blog. When addressing the substantial settlement, Hertz representatives stated that they believed the company would recover a “meaningful portion” of the $168 million settlement from its insurance carriers.

Hertz’s statement is noteworthy because the publicly reported facts indicate that coverage could depend on resolution of the following question: was it corporate negligence or intentional conduct that led to the settlement? While coverage is ultimately a product of the specific policy terms, virtually every policy contains an exclusion for intentional wrongful acts. And at least some of the claims against Hertz allege that erroneous criminal reports were part of the company’s corporate strategy. If Hertz and its insurers eventually find their way into coverage litigation, they may end up testing the limits of the underlying policies’ exclusions for intentional acts.

Stay tuned.