Emails went out this week to users of popular mobile ride-sharing app Uber, heralding some lawmakers’ plans to “kill” the innovative taxi-on-demand service in California.
The mass mailings refer to Assembly Bill 2293, introduced in the Legislature in February and aimed at enacting stiffer liability insurance coverage requirements for transportation network companies and their drivers.
At risk of footing a higher bill are ride-sharing companies such as Uber and Lyft, both of which operate in Santa Barbara using cell phones and maps to connect riders with the closest drivers. Passengers pay a flat rate with a credit card and can split the cost, touted as cheaper than regular cabs.
Lawmakers supporting AB 2293 say the bill would make drivers and ride-sharing companies more responsible to the consumer — requiring drivers carry a certain level of insurance and the company to provide protection if they don’t.
Senators are looking over the bill in Sacramento this week, and a vote could come this week or the next.
State Sen. Hannah-Beth Jackson could not be reached for her thoughts on the legislation.
Uber, which first launched in San Francisco in 2009, hires independent contractors to transport up to four passengers in the drivers’ own pre-inspected cars and operates in nearly 100 cities worldwide. Lyft serves more than 30 cities nationwide.
Because of the growing popularity of ridesharing, California’s bill could have implications nationwide. Officials in cities such as Los Angeles have already voted to keep them out.
Calls for an increase in ridesharing company liability amplified earlier this year after an Uber driver struck and killed a pedestrian in San Francisco. The company said the driver wasn’t working at the time of the accident, although the driver indicated otherwise.
Under existing law, transportation network companies, such as Uber, are required to obtain an operating permit from the California Public Utilities Commission, although drivers aren’t held to the same standard. By contrast, traditional taxi company owners secure a business license from the city, and all drivers need permits and meters in their cars.
AB 2293 would amend the existing Passenger Charter-party Carriers’ Act with specified requirements for liability insurance coverage, effective July 1, 2015.
Although iterations of the bill continue to change, the law would force Uber drivers to carry a liability insurance of at least $100,000 during a “Period One” phase when they've turned on their apps but haven't been yet matched with a rider. Once a passenger has been picked up and until they’re dropped off, a policy of $1 million would be necessary in case of death, personal injury or property damage.
A driver’s personal insurance doesn’t extend to the vehicle used for ridesharing, the bill states, and the transportation network company would have to offer the coverage as primary.
Uber currently offers drivers $5,100 coverage when an app is on and not carrying a passenger, and the $1 million insurance policy kicks on when they pick someone up, according to Eva Behrend, a spokeswoman for Uber Technologies.
Since most drivers are using their own personal vehicles, and can have the app on without intending to pick up passengers, the higher rates aren’t justified, she said.
“AB 2293 is a gift to trial attorneys, big taxi and insurers that will kill ridesharing as we know it by creating insurance mandates that are 30 times more than the state mandates for taxis and any car on the road,” Behrend said. “Nearly 60,000 people have already signed our petition against AB 2293 and we urge lawmakers to listen to Californians instead of special interests.”
The bill would also prohibit the companies from disclosing personal information of a passenger and impose a state-mandated local program to enforce the rules. The state commission and Department of Insurance would then collaborate on a study of transportation network companies to assess effectiveness of coverage requirements, reporting those findings by the end of 2017, according to the bill.