Dara Khosrowshahi, Chief Executive Officer | Uber
California Governor Gavin Newsom has signed SB 371, a new law aimed at reducing insurance costs for rideshare drivers and passengers in the state. The legislation was developed through a compromise between state officials, rideshare companies, and SEIU California. It is connected to AB 1340, another bill passed by the legislature that is expected to be signed soon.
SB 371 targets high insurance expenses for rideshare services by adjusting the uninsured/underinsured motorist (UM/UIM) coverage requirements. Previously, California required rideshare vehicles to carry $1 million in UM/UIM coverage—an amount not required of taxis, buses, or personal cars. This contributed to higher fares for riders and reduced earnings opportunities for drivers.
"Starting January 1, 2026, every Uber passenger trip in CA will be covered by: UM/UIM Coverage ($60,000 per individual and $300,000 per accident). No other passenger vehicle in the state is required to carry any UM/UIM coverage," according to the statement. Additionally, each trip will include "$1 million in liability insurance to cover injuries or property damage in accidents caused by the rideshare driver" and "$1 million in occupational accident coverage—provided by Prop 22—that helps drivers with medical bills if they’re injured while driving, no matter who is at fault." Uber also maintains insurance that covers repair costs for drivers' vehicles regardless of fault.
AB 1340 gives rideshare drivers an option to organize around pay and benefits without losing their independence under Proposition 22. "This bill does not mandate a union; however, it gives drivers a legal option they haven’t had before to organize if they choose to," states the release. Under this framework, drivers can opt into sectoral bargaining and elect a union representative without giving up control over their work schedules or company choices.
The FAQ section clarifies that AB 1340 does not change driver classification or require participation in driver organizations. "A driver representative organization, if one is elected, is not allowed to bargain any terms that limit the flexibility you are guaranteed by Prop 22." Dues payments are voluntary if an organization is certified as a bargaining representative.
The legislation also includes protections against retaliation for organizing activities: "It is already illegal under Federal law for any business to discriminate on the basis of union membership. AB 1340 makes it unlawful for any Transportation Network Company (TNC) to retaliate against a driver for exercising their right to elect a bargaining representative."
Supporters say these changes lower costs for riders while creating stronger voices for drivers through collaboration among industry stakeholders.