Ridesharing Insurance Legislation Advances In California

By | June 26, 2014

A bill that would impose insurance requirements on ridesharing companies in California passed a state Senate committee 9-1 on Wednesday, although with somewhat lower costs to the industry than previously written into the bill.

Companies such as Lyft, Sidecar and UberX, which is a part of black-car service Uber, allow passengers to summon paid rides using apps on their smartphones and have gained in popularity in dozens of U.S. cities over the past few years.

But they face opposition from taxi companies which argue the upstarts do not face the stringent regulation they do, and insurance companies want ridesharing drivers to carry more expensive insurance policies.

The bill, AB 2239, would require ridesharing companies’ insurance to cover drivers from the moment they turn on their app, not just from when they accept a ride on their app. The version the insurance committee approved on Wednesday requires $750,000 worth of insurance coverage in such cases, down from $1 million in the previous draft.

The Property Casualty Insurers Association of America, the Personal Insurance Federation of California, the American Insurance Association, the National Association of Mutual Insurance Companies and a few other associations have argued that anytime a ridesharing provider has open a smartphone app and is ready to accept rides that a TNC’s commercial coverage should be in play.

The bill, which has already been approved by the State Assembly, must still get through the appropriations committee and then the full Senate before becoming law. The same fate awaits a related bill that would require drug and alcohol tests for ridesharing drivers.

The move to dictate more extensive coverage stems from a New Year’s Eve incident in San Francisco when an UberX driver killed a child while his app was on, but before he had accepted a ride.

Ridesharing companies say the stepped-up insurance requirements are not fair because they could potentially leave them liable for hours of driving time when a driver has an app turned on but does not accept rides.

Separately, the California Public Utilities Commission, which is seeking to regulate ridesharing in the state, has scheduled a July 10 hearing for its own proposed rules. Those rules would also require the ridesharing companies’ insurance kick in from the time drivers turn on their apps.

In New Mexico, the state Public Regulations Commission voted 3-2 on Wednesday to deny Uber’s application for a temporary operating permit, Arthur Bishop, a spokesman for the commission, said in an email. The commission also voted unanimously to consider amending its rules to include provisions for ridesharing services, he said.

(Reporting by Sarah McBride; Additional reporting by Alex Dobuzinskis; Editing by Mohammad Zargham)

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