California lawmakers pass law affecting Uber insurance (2 of 2)
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Every time you slip into the passenger seat or get behind the steering wheel of a motor vehicle, you run the risk of being involved in a car accident. For that reason, all drivers are required to carry at least minimal insurance coverage in California.
Then there are additional insurance coverage requirements for drivers who make a living carrying people in their vehicles, such as taxi cab drivers. But new technology has blurred the line between traditional drivers and drivers who charge for offering lifts. Enter: Uber.
Because Uber drivers use their own cars to provide the services, they carry traditional insurance coverage. However, most traditional insurance policies explicitly say that coverage can be denied if drivers are using the vehicles for commercial purposes. Uber offers back-up insurance coverage to its drivers if their own insurance policies deny the claims, but insurance companies say that Uber can’t just offload accident costs on the private insurers.
After a fatal accident at the beginning of the year, a California lawmaker drafted a bill that would require companies like Uber to make sure that their drivers carried adequate insurance coverage for commercial drivers that would kick in the moment the driver turned on his or her app and began looking for passengers.
The bill led to a heated showdown between Uber, the insurance industry, safety advocates and the taxi industry. Ultimately, lawmakers passed the bill, which also encourages the insurance industry to begin providing coverage options for drivers who only occasionally use their vehicles to offer rides for money. The new law will go into effect in July 2015.
Source: New York Times, “The Question of Coverage for Ride Service Drivers,” Ron Lieber, Sept. 5, 2014