General Motors and Ford said on Wednesday they will stop leasing vehicles in New York unless the state changes a law that holds automotive leasing companies, rather than drivers, liable in car accidents, Reuters reported.

Reuters said that the states of New York, Rhode Island and Connecticut have so-called "vicarious" liability laws that hold the owner of a vehicle liable for an unlimited amount in accidents.

In the case of leased or rented vehicles the owner is the company listed on the title, such as Ford Credit or General Motors' finance unit GMAC. Other states have changed their laws to limit liability, Reuters noted.

Other reports said the laws date back to the days when most cars were chauffeur-driven and their drivers could not afford to pay for damages.

"The exposure for us is in the millions," GM spokesman Tom Henderson told Reuters. "It's at a level where we can't justify continuing leasing in New York unless the laws change."

Reuters said leasing is about twice as popular in New York as in the rest of the country, largely because of tax breaks it offers businesses and the flexibility it gives drivers to have a new vehicle every few years. More than 20% of all GM and Ford vehicle sales in New York are leases, compared to 12% for the United States, the news agency added.

Reuters said that, earlier this year, New York State senator Owen Johnson, a Long Island Republican, submitted a bill that would transfer the liability to the lessee from the leasing company. The liability would be capped for car rental agencies.

Just eight states have vicarious liability laws that hold leasing or car rental companies liable, and Michigan, California and Minnesota recently capped the amount for which owners could be held liable, a summary of Johnson's bill said, according to Reuters.

Car rental and leasing companies paid more than $1 billion in vicarious liability claims in New York state in 1997 alone, the summary said, according to Reuters, which noted that more than 30 independent leasing companies have gone out of business since September 2000 as a result of no insurance and exposure to liability claims, the summary said.