Attention California commercial auto insurance providers – a ride-service insurance bill calling for new hybrid policies to be developed by July 1, 2015 covering companies like Lyft and Uber, has been approved.
Despite opposition from transportation network companies (TNCs) to the initial version of California bill AB2293, it has been pushed through the State Legislature after Assemblywoman Susan Bonilla (D-Concord) lowered the amount of coverage required.
“Consumers can be confident when using TNCs, there will be greater transparency on insurance matters for TNC drivers, personal auto insurance policies will be protected from commercial activities, a pathway for new insurance products has developed with reasonable insurance limits, and flexibility to allow for continued innovation," said Armand Feliciano, vice president of the Association of California Insurance Companies.
Governor Jerry Brown, who was involved in the final negotiations of the bill, is expected to sign it into law in the near future. Furthermore, when the bill does become law, it directs the State Department of Insurance to expedite approval of such innovative products.
The new coverages are anticipated to give drivers both personal insurance for their own usage, and insurance for TNCs.
"The measure protects consumers and encourages innovation in the insurance marketplace," said Feliciano. "AB 2293 has a delayed implementation date, so insurers and the California Department of Insurance can develop and approve the necessary new products designed specifically to meet the needs of TNC drivers."
Key amendments to the bill include:
1. Establish a personal insurance firewall to ensure personal insurance auto policyholders will no longer cover the commercial activity of TNCs, beginning July 1, 2015.
2. Lower the primary insurance coverage requirement in the timeframe formerly known as, "App On to Match," to: $50,000/$100,000/$30,000 with excess coverage of $200,000.
3. Ensure California Public Utilities Commission oversight of transportation network companies (TNC) such as Uber and Lyft.
4. Expedite the approval process for new TNC insurance products.
5. Have a delayed implementation date of July 1, 2015 in order for new products to be developed to meet the needs of the marketplace.
Previously, producers working with drivers for Uber and Lyft have had difficulty finding insurance for commercial activities. Commercial policies are often expensive for the one-man operations, and insurers are loathe to cover ride-sharing through personal insurance policies.
If signed into law, the bill would provide both drivers and their insurance agents with more options.
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