California’s Insurance Reform Measures for Ride-Sharing Services

On July 1, 2015, California implemented new insurance laws for drivers who are employed by ride-sharing services, Uber and Lyft. The stringent regulations are an attempt by the legislature to clearly distinguish when and whose insurance coverage takes effect during the time that workers are driving but not actively engaged in seeking rides or transporting passengers.

California’s-Insurance-Reform-Measures-for-Ride-Sharing-Services-300x199The legislation followed a deadly car accident involving an Uber driver and centered upon a debate as to whether the driver was actually covered by the company’s insurance at the time of the accident. The parameters of the driver’s coverage raises the broader issue of the “employment” status of the Uber driver at the time the accident occurred.

The new California law provides that Uber and other ride-sharing service providers are now liable for accidents and damages incurred by third parties during “Period 1,” or the time frame during which the driver’s Uber application is active, but the driver has not accepted a fare and does not have a passenger in the car. Uber tried to assert that its driver is not actually working for Uber during Period 1.

Uber now must provide primary third-party liability insurance (covering injury, death and property damage) during Period 1. In addition, ride-sharing service companies must provide excess liability coverage in the amount of $200,000 in the event of major accidents. The law also specifies that a driver’s personal coverage plan is inapplicable during Period 1. This clarification effectively precludes claims by Uber and Lyft that their insurance policies do not apply during this period because the driver’s personal insurance policy supplies coverage.

Just prior to the enactment of this legislation, only one major insurance carrier offered ride-share insurance. Many advocates of California’s new insurance laws have praised Farmers for taking the first step toward insuring this new class of drivers and expressed optimism that the remaining 70,000 or so rideshare drivers in California would be motivated to inform their insurance companies about their employment. It is estimated that over 80% of insured drivers have not disclosed their employment with a ride-sharing service to their insurance carriers.

DeAnn Flores Chase and her team of experienced attorneys can guide you in understanding changing laws in the state of California. Contact Chase Law Group, P.C. at (310) 545-7700 or visit to schedule a consultation.