This past October, Gov. Gavin Newsom signed a bill into law that was widely touted as lowering the cost of rideshare services provided by companies like Uber and Lyft throughout California.
Those behind the law, which took effect at the beginning of this year, also claimed that it helped drivers for these companies engage in collective bargaining and other advantages of unionization. However, others have argued that the law gives these unions “basically no bargaining leverage.”
What many Californians don’t realize, however, is that the law lowered some mandatory insurance limits for rideshare providers considerably. They previously had to provide at least $1 million in uninsured/underinsured (UM/UIM) coverage for their drivers. This was lowered to just $60,000 for each individual passenger and $300,000 per accident.
How much did the high mandatory insurance requirements affect rideshare fares?
Those who advocated for the changes said that the $1 million requirement was unnecessarily high because most claims weren’t nearly that costly. That requirement was implemented in the early days of ridesharing.
Further, both leading rideshare companies claimed that the $1 million insurance requirement added considerably to the cost of an average ride (for example, totaling 45% of an average fare in Los Angeles, according to Uber). Lyft said that fares in California were twice the national average.
The state senator behind the legislation said that it was important to make these services more affordable for Californians – especially those who rely on them to get to and from work and school and for other necessary travel. Owning, maintaining and keeping gas in a car in California can be especially costly.
Passengers involved in a rideshare crash can face a lot of confusion and challenges in getting fair compensation to cover medical care and other expenses and damages. These lower mandatory minimums can make that even more difficult. Find out how The Law Office of Aman N. Shah can help.
