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Ride-Sharing Companies, Lawmakers Reach Deal on Insurance Coverage Requirements

A new bill bolstering existing insurance requirements for ride-sharing companies awaits the signature of Gov. Jerry Brown after both sides of the debate struck a deal over coverage terms.

That’s good news for taxi-on-demand services such as Uber and Lyft, which both withdrew opposition to Assembly Bill 2293, introduced in the California Legislature in February to enact stiffer liability insurance coverage requirements for transportation network companies and their drivers.

Lawmakers who supported the bill to hold ride-sharing companies more accountable to the consumer found common ground with the innovative business model last week.

Companies such as Uber and Lyft, both of which operate in Santa Barbara, use 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.

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.

Under existing law, transportation network companies must obtain an operating permit from the California Public Utilities Commission, although drivers aren’t held to the same standard. Traditional taxi company owners secure a business license from the city, and all drivers need permits and meters in their cars.

AB 2293 amends existing law with specified requirements for liability insurance coverage, effective July 1, 2015. The bill passed 73-0 in the Assembly and 30-4 in the Senate, where state Sen. Hannah-Beth Jackson gave her approval.

Under the bill, drivers must carry a $100,000 policy per person and $300,000 per occurrence for death and personal injury, with $50,000 for property damage from the moment a driver logs onto the app until the driver accepts a ride request.

Once a passenger has been picked up and until he or she is dropped off, a policy of $1 million would be necessary in case of death, personal injury or property damage. The bill allows personal or company policies to apply, or combination of both.

Earlier bill iterations required at least $100,000 in liability insurance when a driver had an app on but hadn’t picked up a passenger, which companies considered unjust since many drivers are using their own personal vehicles and might have an app on without intending to pick up.

New requirements are in line with what Uber already offers, spokeswoman Eva Behrend.

“It just kind of affirms the insurance that we already have in place,” Behrend said. “Californians loves Uber, and lawmakers have heard them loud and clear. Common sense has prevailed and the winners are Californians.”

Brown is expected to sign the bill by the end of the month.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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