Online ride-sharing companies will provide more insurance for drivers under a bill sent to the governor's desk -- the result of a deal struck after months of hardball negotiations.The Assembly on Thursday voted 70-0 to pass AB2293 by Assemblywoman Susan Bonilla, D-Concord; the Senate had passed it Wednesday 30-4. Bonilla called it "a testament to good public policy" that ensures consumers and drivers will be protected "while also allowing this innovative business model to thrive."
Ride-sharing companies like Uber, Sidecar and Lyft connect passengers and drivers through smartphone apps. But it's not sharing in the casual carpool sense: The passengers pay the drivers, who are considered independent contractors. The bill will let insurers create new commercial policies for the fast-growing industry. And the measure specifies that personal policies will no longer cover the drivers' commercial activity starting next July.
From the moment a driver turns on the company's smartphone app, the company will have to provide insurance amounting to $50,000 in liability coverage for death or injury to a single person; $100,000 in coverage for all damages in a single accident; and $30,000 for property damage. In addition, $200,000 of excess liability coverage would be required when the driver's personal policy is insufficient. The company must then provide $1 million in coverage once the driver is matched with a passenger.
An earlier version of the bill had required up to $750,000 insurance from the moment the app is turned on -- a sum the ride-sharing companies had complained was far more than what's required of taxis, and for a time in which the drivers aren't even on the clock yet.
Bonilla said the bill's final form "creates a policy that is both affordable and flexible but still ensures corporate accountability." The companies were satisfied enough to lift their opposition to the bill.
"Californians love Uber and lawmakers have heard them loud and clear," Uber spokeswoman Eva Behrend said. "Common sense has prevailed, and the winners are Californians."
That's a much more conciliatory tone than just weeks ago, when Uber sent mailers to voters in a state Senate district where Bonilla is expected to run next year, accusing her of caving in to the insurance industry at the expense of consumers. Uber also aired radio ads featuring former Golden State Warriors star Baron Davis urging lawmakers to kill the bill.
The California Public Utilities Commission in September 2013 created a new business category called "transportation network companies" to cover on-demand ride services and set some rules and regulations. It since has proposed tougher insurance requirements and warred with the companies over their operations at major airports without permits.
An Uber driver struck and killed a 6-year-old girl in San Francisco while on his way to pick up a passenger on New Year's Eve. And because no passenger was in the car yet, Uber denied responsibility.
Amid an outcry, Uber and Lyft earlier this year started providing coverage for the time from when a driver is matched to a passenger until the passenger leaves the car -- $1 million, which is more than 30 times more than the state's requirement for taxis. But the PUC and lawmakers have moved forward with stiffer requirements anyway.
Robert Callahan, the Internet Association's California director, applauded lawmakers for coming up with a compromise. "Ridesharing has revolutionized the way we move around our communities, and Californians have embraced it as a safe, innovative and cost effective transportation option," he said
Sens. Ellen Corbett, D-San Leandro; Jim Beall, D-San Jose; Bill Monning, D-Carmel; and Ted Lieu, D-Torrance, voted against the bill Wednesday. During a floor debate before the vote, Monning said the Insurance Committee he chairs had reached bipartisan agreement on requiring $750,000 in insurance from the moment the app is turned on, because that's what's required of charter carriers like limousines.
"This notion that any new technology, anything that we get through an app, should be sacrosanct and immune from government regulation is just wrong," Monning said.
The Consumer Attorneys of California also withdrew its support from the bill for the same reason, claiming ride-sharing companies "have demanded, and to a degree received, special treatment."
Another attempt to impose new regulations on the ride-sharing industry died this week.
AB612 by Assemblyman Adrin Nazarian, D-Van Nuys, would have required deeper background checks, participation in a DMV program that lets employers monitor workers' driving records, and drug and alcohol testing of these companies' drivers. It also would have barred the companies from using drivers with past convictions for certain crimes, including forgery and credit-card fraud.