Home > Property & Casualty > California Assembly Bill 1871 leads to more ride sharing

California Assembly Bill 1871 leads to more ride sharing

Traditionally, state insurance regulations have prohibited automobile owners from renting their personal vehicles to others unless the car is classified as a livery or “for-hire” vehicle.  Earlier this year, California became the first state in the country to enact a law, Assembly Bill 1871, designed to facilitate personal vehicle sharing arrangements.  This legislation comes at a time where there is a growing movement and demand for accessing vehicles that are owned by others. It is now quite common to “rent” a car without having to transact business with Hertz, Avis or any of the large car rental companies.  Beyond the obvious conveniences, ride share programs promote a cleaner environment, a reduction in automobile emissions and pollutants and a world with potentially fewer cars on the road. 
 
Insurance regulators must now attempt to weigh these environmental benefits against the challenges in underwriting car sharing risks.  California’s legislation attempts to strike this balance.  AB 1871 provides the following:
 
  • Cars enrolled in a Personal Vehicle Sharing Program (PVSP) shall not be deemed “for hire” vehicles for insurance purposes solely because they are rented out to others by owners.
  • The PVSP must provide insurance to the renters in an amount equal to three times the minimum requirements in California, but not less than the amount maintained by the owner of any rented vehicle.
  • The PVSP assumes all liability of the owner while the car is being rented out.
  • The insurer of a rented vehicle may exclude coverage during the rental period.

We expect other states to follow California in embracing these types of programs.  William Gallagher Associates’ team has successfully placed coverage for PVSPs and stands ready to help others navigate the complex world of car sharing and insurance regulations, both in California and elsewhere throughout the country.

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  1. Philip Edmundson
    May 9, 2011 at 8:43 pm | #1

    This is really an exciting new development in the “green” revolution!

  2. July 2, 2011 at 2:17 am | #2

    This is a great idea. Companies like Zipcar have sprung up to fill the need for temporary access to a car; being able to share a car among people will really help reduce emissions without limiting your options to just public transport.

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