California Senate passes bill lowering rideshare insurance requirements

Senate Bill 371, authored by California State Sen. Christopher Cabaldon, has passed both the Senate and Assembly with strong bipartisan support. The bill aims to reduce fares for rideshare services like Uber and Lyft by lowering insurance requirements for drivers. Governor Newsom has already expressed his backing for the bill, which is part of a broader legislative effort to benefit both riders and drivers.

Currently, rideshare drivers are required to carry $1 million in coverage for accidents involving uninsured or under-insured motorists. SB 371 proposes reducing this requirement to $60,000 per individual and $300,000 per accident. In contrast, other transport services such as taxis and buses do not have such stringent requirements.

"This will lead to a direct reduction in fares for Californians all over the state," said Sen. Cabaldon. He also noted that addressing driver needs was crucial to attracting enough drivers to meet demand and prevent fare increases.

SB 371 is paired with AB 1340, introduced by Assemblymembers Buffy Wicks and Marc Berman. This companion bill provides a legal framework for rideshare drivers to organize and negotiate work terms with companies while adhering to Proposition 22, which classifies them as independent contractors.

The bills were merged following negotiations between Uber, Lyft, the Service Employees International Union of California (SEIU), and the authors. "My interest in carrying SB 371 was to lower fares for people who use rideshare for necessary transportation," Sen. Cabaldon said.

Uber reports that current insurance mandates have led to litigation abuse and increased costs for riders in California. For example, in Los Angeles, nearly half of a typical ride fare covers government-mandated insurance costs. Lyft estimates that insurance accounts for an average of $6 per ride in California—twice the national average.

The existing insurance requirements were set over ten years ago when the rideshare industry was new. However, data from the past decade suggests these levels are excessive.

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