California senator proposes easing $1 million rideshare insurance mandate to lower costs

Senator Christopher Cabaldon, representing West Sacramento, has introduced Senate Bill 371 (SB 371) with the objective of reducing California's $1 million insurance requirement for rideshare companies. The proposed legislation aims to make rides more affordable for passengers and increase income opportunities for drivers.

A recent economic study conducted by Berkeley Research Group (BRG) highlights that California’s current $1 million uninsured/underinsured motorist (UM/UIM) requirement for transportation network companies (TNCs), such as Uber and Lyft, significantly exceeds typical needs. According to BRG, 96% of personal auto UM/UIM claims settle for less than $100,000, raising questions about the necessity of the existing high mandate.

The study further claims that the inflated requirement encourages legal exploitation. In nearly 85% of UM/UIM cases in California, attorneys are involved, leading to average payouts exceeding $300,000 when claims are litigated. In contrast, states like Illinois with lower UM/UIM thresholds see attorney involvement in just 45% of cases and average payouts around $30,000 per claim.

Cabaldon presented his proposal at a State Assembly Insurance Committee hearing on July 16, 2025. He pointed out economic studies showing most claims settle well below the current requirement. The bill continues its advancement through Assembly committees with backing from business groups, civil rights organizations, and major rideshare companies.

These findings support SB 371, authored by Senator Cabaldon. Initially, the bill aimed to reduce the UM/UIM minimums from $1 million to $50,000 per person and $100,000 per incident during a rideshare trip. However, after pushback from consumer advocates, it was amended to set higher minimums of $100,000 per person and $300,000 per incident. The bill also mandates that the TNC’s policy be primary to ensure accident victims do not need to rely first on their own coverage.

Supporters argue that this measure will make rideshare services more affordable by lowering insurance costs passed along in fares. A BRG study estimates that reducing UM/UIM mandates could cut costs enough to boost ride demand by approximately 10%, translating into lower prices for passengers and increased earnings for drivers through higher trip volumes. The bill also requires savings from reduced coverage to be reinvested for the benefit of both drivers and riders. Proponents say this makes it one of the few immediate cost-of-living relief efforts advancing in Sacramento compared to housing or energy policies that may take years to deliver results.

The coalition supporting SB 371 includes business and civil rights groups such as the Bay Area Council; California Asian Pacific; Black and Hispanic Chambers of Commerce; Chamber of Progress; Silicon Valley Leadership Group; Uber; Lyft; and the Sacramento chapter of the National Action Network. The Assembly Insurance Committee analysis notes that several labor unions and insurance groups have listed their position as "oppose unless amended," indicating conditional support if higher coverage minimums are incorporated into the bill.

SB 371 cleared the State Senate unanimously with a vote of 39–0 in May and is progressing through Assembly committees this summer. Under its current draft, the bill would sunset in 2031 and require a joint study by the California Public Utilities Commission and Department of Insurance by December 31, 2030, to assess its impacts on riders, drivers, and accident victims.