California Enacts New Law On Rideshare Insurance Coverage
Ridesharing companies have risen to prominence in recent years. In lieu of more traditional cab services, online ridesharing companies allow consumers to connect to drivers through a Smartphone app. The drivers for these services are independent contractors and use their own vehicles. While less expensive than taxis, the taxi industry has argued that these services do not face the same stringent state regulations that cab companies do, including for insurance coverage. Ridesharing companies generally do no additional training for their drivers.
After a year of negotiation, Governor Jerry brown signed a new law to address this issue on September 17. Under the new law, every time a driver turns on a smartphone app indicating he or she is on duty, that driver must have $50,000 in liability coverage for death or injury to one person, and at least $100,000 in coverage for an accident. Once the driver picks up a passenger, insurance coverage must rise to $1 million.
Legislators suggested the bill was a compromise between the industry and concerns over adequate insurance coverage. Originally, the bill would have required drivers to have $750,000 in coverage just for turning on the smartphone. Companies such as Lyft, Sidecar and UberX argued that even taxis do not have to have that much insurance coverage.
The bill passed the state Senate by a 30-4 vote and unanimously in the Assembly. The provisions will take effect in the summer of 2015.
Insurance coverage for rental and commercial vehicles
The law on rental and commercial vehicle liability can create myriad issues if an accident occurs. Legal disputes regarding vicarious liability, contract violations, permissive use regulations, and hiring negligence can all arise.
As one example, early in 2014 a young girl was struck and killed in a San Francisco crosswalk by a driver working for Uber. The family of the victim sued Uber for wrongful death. The driver did not have a passenger at the time of the accident, so Uber has argued that the driver was not working for them when the girl was killed.
While that case has yet to be resolved, the issues raised by that tragic accident spurred legislators to pass the recent law on rideshare insurance coverage.
Experienced insurance law firm can help
Whenever an insurance coverage dispute arises in an auto rental or ridesharing program, there can be numerous legal issues at stake. Companies concerned about liability for third-party contractors or vehicle drivers should contact an experienced insurance coverage attorney to discuss potential liability and legal options moving forward.