California Insurance Mandate for Ride-Share Backed by Lawmakers

Ride-share companies would have to provide at least $200,000 of insurance when a driver is on duty and $1 million of coverage when the driver has picked up a customer.

August 29, 2014

Michael B. Marois

(Bloomberg) -- Uber Technologies Inc. and other ride-sharing companies in California that let people arrange transportation in private cars would be required to boost insurance for drivers under legislation passed today.

The proposed law was approved by a vote of 30-4 in the state Senate and 67-0 in the Assembly. The bill now heads to Governor Jerry Brown, a Democrat whose administration helped draft a compromise version of the measure.

See also: Coming Soon(er): Driverless Cars

Under the proposal, ride-share companies operating in the most populous U.S. state would have to provide at least $200,000 of insurance when a driver is on duty and $1 million of coverage when the driver has picked up a customer.

“This just shows that innovation does not need to trump consumer protection,” said state Assemblywoman Susan Bonilla, the author of the bill. “In California, both can prosper.”

Lawmakers and regulators in states from Illinois to Colorado have been working to define when San Francisco-based startup Uber and competitors such as Lyft Inc. and Side.Cr LLC are liable for accidents. Uber is seeking to attract drivers and win confidence from potential passengers as it expands. The company was valued at $17 billion in June after it raised $1.2 billion in a financing round.

Uber and Lyft had opposed the legislation when it was introduced because it required $500,000 worth of coverage when a driver is looking for business. They dropped their opposition after the coverage minimum was reduced.

Bonilla introduced the bill in February, almost two months after a driver who received requests through Uber crashed into a family on a San Francisco crosswalk, killing a 6-year-old girl. Uber said the company shouldn’t be held liable for irresponsible driving by a man it described as “independent.” The family sued Uber in January.

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