Leasing may go by the boards as a vehicle sales option in several states which have adopted laws allowing accident victims to sue owners of vehicles for damages.

Ford Credit says it is re-evaluating the "business merit" of leasing in New York State because of enactment of a "vicarious liability" law wherein it could face suits on vehicles whose titles it retains.

The situation was dramatized early in August when a jury in another vicarious liability state – Rhode Island – found Chase Auto Finance Corp. and its insurer, American International Group, liable for $28 million in damages on a leased car in a 1998 accident that paralyzed a woman.

Ford Credit is considering offering a substitute sales option for leasing in New York, Rhode Island and other vicarious liability states, according to spokesman Dan Jarvis. The alternative would be the Red Carpet balloon note, where the title is held by the customer and a refinanceable end-of-contract balloon sum corresponds to a residual amount on a lease. The difference, of course, which dealers in New York and Rhode Island are quick to note, is that the option to return a vehicle to the lessor does not exist with a balloon.

Other states with vicarious liability laws include California, Connecticut, New Jersey and Florida. However, New Jersey caps the lessor’s liability at $15,000, while Florida exonerates lessors if the customers are insured.