With signing of insurance bill, Lyft, Uber ridesharing loophole comes to an end
AB 2293 bans drivers from using their personal policies and mandates that drivers have to be covered from the moment they turn on their app and look for customers.; Credit: Photo by Daniel X. O'Neil via Flickr Creative Commons
Amid all the talk about cutting-edge technology, much of Uber and Lyft’s success actually owes to that fact the ride-sharing companies have been able to exploit a basic loophole: The companies foist the cost of insurance on their drivers, but the drivers' insurance companies don’t know they are underwriting cars for hire, and even if drivers wanted to be honest and get a policy that would cover ride-sharing, they couldn’t, because no such policy exists.
AB-2293, introduced by Assemblywoman Susan Bonilla (D-Concord) and signed into law Wednesday by Governor Jerry Brown, tries to close the loophole by paving the way for insurance companies to offer hybrid personal/commercial policies by next summer.
Uber once derided the bill as a backroom deal between insurance companies and trial lawyers.
"The bill does nothing to enhance safety, yet compromises the transportation choices and entrepreneurial opportunities Uber offers Californians," the company wrote in a June blog post that encouraged customers to contact their representatives opposing the bill.
However, the company backed down and supported the legislation when Bonilla insurance requirements were lowered.
AB 2293 also specifically bans drivers from using their personal policies and mandates drivers have to be covered from the moment they turn on their app and look for customers, which is a response to the tragic accident on New Year's Eve in San Francisco when an UberX driver hit and killed a six year old child.
Uber argued that because the driver was waiting for a fare he wasn't working for the company at the time, so he wasn't covered by the company's insurance.
