California lawmakers have introduced a bill aimed at reducing insurance costs for rideshare drivers, with the intention of passing savings on to passengers who use services like Uber and Lyft.
According to the California Legislature, Senate Bill 371, authored by Senator Rick Cabaldon, proposes revising the state’s decade-old insurance rules for transportation network companies (TNCs). The bill seeks to eliminate a $1 million coverage requirement for uninsured and underinsured motorist (UM/UIM) incidents, which supporters argue currently leads to unnecessary cost inflation. “Drivers are seeing the high cost of state-mandated insurance eat into their bottom line, and riders are seeing the cost of their rides increasing,” Cabaldon said. He further said that SB 371 will ensure that the burden of insurance remains with the company while adjusting coverage to what is actually needed.
The bill mandates that TNCs—not individual drivers—must carry the UM/UIM policy. Proposed amendments would lower the mandated coverage to $100,000 per person and $300,000 per accident, aligning with limits recently adopted in California’s Financial Responsibility Law for personal drivers by 2035. Supporters claim this change will provide immediate financial relief to both drivers and passengers without compromising safety. Uber informed legislators that “drivers are receiving smaller shares of the fare riders are paying, leading to confusion and frustration.” Lyft estimates that over $6 per ride is allocated to insurance in California, a figure double the national average.
In testimony provided by rideshare platforms, it was noted they routinely cover claims directly but argue that high policy limits have become a magnet for costly litigation. A study by Berkeley Research Group found California’s average UM/UIM claims were ten times higher than in comparable states and almost always involved lawyers, driving up costs.
Consumer advocates express concern that reduced limits may leave some riders undercompensated. However, in a sign of softening opposition, the Consumer Attorneys of California have updated their stance to “Oppose Unless Amended,” supporting the bill’s progress if amended to include higher coverage thresholds and a formal impact study. The bill also requires that the California Public Utilities Commission (CPUC) publish aggregated accident and claims data spanning 2022–2024 and mandates a joint study with the Department of Insurance to evaluate long-term effects of the reform. The measure sunsets in 2031 unless reauthorized. SB 371 has garnered support from chambers of commerce, technology coalitions, civic groups, and rideshare companies but continues to face resistance from consumer advocates and labor unions.
