Legislation signed by Gov. Jerry Brown today will set new insurance standards for transportation networking companies like Uber and Lyft based on a compromise reached with the companies last month.
The bill mainly effects periods when drivers for the TNCs — companies that connect paid drivers to passengers through a smartphone app — have their app turned on and are looking for customers but have not yet picked up a passenger.
The issue drew attention in San Francisco earlier this year when Uber driver Syed Muzzafar, 57, struck and killed 6-year-old Sofia Liu the night of Dec. 31.
Uber has continued to argue in court that because Muzzafar was not carrying a passenger during the crash, despite having his Uber app activated, the company was not liable for damages, despite changing its policy to cover drivers during those circumstances.
Insurance policies enacted by Uber and Lyft this year allowed for $50,000 per injury in an accident with up to $100,000 covered, and $25,000 for property damage while the app was activated but before the driver had picked up a passenger.
Once a passenger was in the car, the policy would go up to $1 million of liability coverage per incident with $50,000 of contingent collision coverage, depending on the driver’s personal policy.
At all other times, the driver’s personal auto insurance policy is in effect.
The bill as originally introduced by Assemblywoman Susan Bonilla, D-Concord, would have required the companies to provide $1 million any time a TNC driver’s app was activated, regardless of whether there was a passenger in the car.
Uber objected strenuously to the bill, calling it in June a “back-room deal by insurance companies and trial attorneys to prematurely force the ridesharing industry to fit their special interests.”
The final version of the bill was reached by compromise with Uber and Lyft and passed by the legislature last month. Its requirements are similar to the policies Uber and Lyft had already voluntarily enacted — $50,000 coverage per injury in an accident with up to $100,000 covered, and $30,000 for property damage before the driver picks up a passenger. It will take effect next July.
In a statement last month, Lyft said the company does not see the compromise legislation as signed by Brown today as a permanent solution.
“A truly permanent solution must include the creation of modern insurance products tailored for drivers who participate in peer-to-peer transportation,” a Lyft representative said.
“Lyft’s long-term goal is to reduce the number of empty seats in cars, the number of cars on the roads and, ultimately, the need to own a car all together,” the representative said. “We continue to believe that innovation in the insurance marketplace is the most effective way to maintain the highest level of safety while allowing ridesharing to thrive.”
Bonilla said the process represented “what true public policy should be — a collective process for all stakeholders to contribute.”
The legislation “sets the standard for this innovative industry, ensuring consumer protection and public safety remains a top priority,” Bonilla said in a statement.
Another regulatory bill for TNCs introduced this year that would have set stricter background check standards failed at about the same time Bonilla’s legislation passed.
The legislation introduced by Assemblyman Adrin Nazarian would have imposed mandatory background screening and drug and alcohol tests for TNC drivers but encountered strong opposition from companies like Uber.
In a statement, the company called Nazarian’s bill “a flagrant attempt to stymie innovation and competition by an antiquated industry. It is an obvious play by the taxicab industry to kill competition and limit consumer choice.”
Scott Morris, Bay City News