Drivers for ride-sharing companies such as Uber and Lyft must carry minimum levels of insurance under legislation that will take effect next July.
Gov. Jerry Brown announced Wednesday that he had signed AB2293 by Assemblywoman Susan Bonilla, D-Concord.
Supporters of the legislation said ride-sharing companies were operating in an insurance gray zone by using personal cars for commercial purposes. Bonilla said the case of an Uber driver who struck and killed a 6-year-old girl while looking for passengers in San Francisco highlighted gaps in insurance requirements that she wanted to close.
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Her legislation prompted one of the biggest public relations and lobbying battles of the legislative session, pitting insurers and consumer groups against high-profile transportation startups.
AB2293 requires drivers to carry a basic policy that includes liability insurance of $50,000 for killing or injuring a person, $100,000 for damage from a single accident and $30,000 for property damage. Uber and Lyft supported Bonilla's bill after she agreed to reduce the required amount of excess insurance from $500,000 to $200,000 when drivers do not have passengers in their vehicles.
Bonilla said the law will help protect consumers.
"This legislation also reinforces corporate responsibility, safeguarding taxpayers from subsidizing the costs of commercial activity,'' she said in a statement.
Some say the legislation is too weak. Senate Insurance Committee Chairman Bill Monning, D-Carmel, said the insurance policies should be able to pay out up to $750,000, similar to the requirements for limousines.
In San Francisco, the number of trips taken by taxi plummeted 65 percent in just 15 month as the services allowing customers to summon drivers with their smartphones have grown in popularity, according to a recent survey by the Municipal Transportation Agency. Taxi drivers have complained that ride-sharing companies such as Uber and Lyft have not had to play by the same rules, including insurance standards.
AB2293 also clarifies that the Public Utilities Commission has oversight over ride-sharing companies.