California Governor Signs Insurance Bill for Ridesharing Services Into Law to Cover Passenger Personal Injury
In September, California Governor Jerry Brown signed a bill into law that would require ridesharing companies like Uber, Lyft, and Sidecar to purchase insurance covering for their drivers, and to cover personal injury and wrongful death in the event of an accident while the driver has a fare.
Although Uber has argued for the past year with local and state governments across the country regarding the nature of the service, many state governments either will not allow ridesharing services to move into their area, or place tough restrictions on them. Uber has often claimed that the company is a mobile app, not a taxi service, and the application allows drivers to connect with people who need rides. However, much discussion about the nature of ridesharing services has ensued because the drivers are independent contractors of the mobile app companies, which means they are not employees. State governments believe the ridesharing companies are therefore taxi services.
This means that ridesharing services need increased insurance coverage in the event of a car accident, which can lead to personal injury or death.
Until very recently, ridesharing services relied on their drivers’ personal insurance coverage – in fact, the companies would not hire drivers that did not have automobile insurance – but those plans only cover a certain dollar amount of damages in a car accident, including medical bills due to personal injury. And, many insurance companies will not cover damages from a car accident if the driver has accepted payment for the ride, because the automobile insurance is for personal use, not business use.
Uber and Lyft have purchased better insurance for their drivers since the complaints began, but until California signed the bill, the ridesharing services’ employee drivers fell into a legal gray area, where their insurance companies could deny coverage, but they were not required to have commercial driving insurance.
California’s ridesharing insurance law requires ridesharing companies to cover their employee drivers as soon as those drivers turn their app on to find fares, so the driver is covered whether they have passengers or not. The personal injury insurance must cover at least $50,000 per person, $100,000 in the event of a wrongful death or personal injury, and $30,000 for property damage. The bill also requires an excess $200,000 of “just-in-case” coverage.
“We have agreed to a compromise that provides clarity for the ridesharing community in California,” Lyft spokeswoman Chelsea Wilson said in a statement. Uber did not immediately respond.
The bill was championed by California assembly person Susan Bonilla, who said the bill “creates a personal insurance firewall to ensure personal insurance auto policyholders will no longer subsidize the commercial activity” of ridesharing companies.
The Strom Law Firm Defends Victims of Car Accident Personal Injury and Wrongful Death Cases
If you or a loved one have been injured or killed because of an accident, whether it was caused by distracted driving or DUI, the attorneys at the Strom Law Firm can help. The sooner you hire one of our accident lawyers, the sooner we will be able to investigate your case and the stronger your case will be. We offer free, confidential consultations to discuss the facts of your case, so do not hesitate to call us. 803.252.4800