California State Legislature proposes reducing uninsured and underinsured motorist coverage requirements

The California State Legislature has announced a proposal to reduce uninsured and underinsured motorist coverage requirements for transportation network companies (TNCs).

Senate Bill 371 seeks to lower the current $1 million uninsured/underinsured motorist (UM/UIM) requirement for TNCs to $50,000 per person and $100,000 per incident. This reduction applies during the period when a passenger is in the vehicle—from entry to exit—and reflects legislative intent to "rightsize" insurance mandates enacted under Assembly Bill 2293 in 2014. The bill aims to balance cost containment with consumer protection, acknowledging that $1 million coverage may be excessive based on available claims data and evolving market conditions.

According to analysis from the Assembly Insurance Committee, approximately 60% of UM/UIM claims by TNCs would settle under the proposed $50,000/$100,000 limits. This suggests that 40% of claims may exceed this reduced threshold, potentially shifting those costs to other sources such as passengers' personal auto policies or leaving them uncompensated. The analysis highlights a consequential cost shift that may affect policyholders and underscores the importance of data-driven evaluation of coverage thresholds.

The bill mandates that the California Public Utilities Commission include aggregated data in its annual report to the Legislature for 2022–2024 on the number of automobile accidents reported by TNCs and the percentages resulting in UM/UIM claims—including claims over $100,000. Importantly, these figures must be presented without identifying individual companies to preserve confidentiality while still providing insight into industry-wide trends. These reporting requirements aim to inform policymakers on whether the lowered thresholds align with actual claim patterns.

The California State Legislature, a bicameral body comprising the Assembly and Senate, is responsible for creating state laws, overseeing regulatory agencies, and balancing complex stakeholder interests—including public safety, economic efficiency, and consumer protection.