BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 1871 (Jones) Hearing Date: June 30, 2010
As Amended: June 1, 2010
Fiscal: No
Urgency: No
VOTES: Asm. Floor(06/03/10)75-0/Pass
Asm. Ins. (05/05/10)07-02/Pass
SUMMARY Would facilitate the ability of carsharing companies
to expand their pool of vehicles by taking advantage of
privately owned vehicles while they are not in use with adverse
consequences for the owners of those vehicles or the owners'
insurer.
DIGEST
Existing law
1.Requires owners and operators of private passenger automobiles
to maintain "financial responsibility," which usually takes
the form of privately purchased insurance in at least the
amounts per accident of $15,000 per person for bodily
injuries, $30,000 for all bodily injuries, and $5,000 for
property damages.
2.Provides that an insurance policy covering an automobile is
primary in the event the vehicle is involved in an accident
that causes a loss to a third party. For example, if a
vehicle owner allows a friend or relative who is not listed in
the owner's policy to drive the vehicle, and the friend or
relative causes a loss in an accident, the policy covering the
vehicle, and not the friend or relative's policy, is the
primary source for payment of damages.
3.Contains very limited prohibitions on an automobile insurer
from classifying a private passenger vehicle as a commercial
or for-hire vehicle, including use as a volunteer for a
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nonprofit organization.
This bill
1.Would state legislative intent that that during the time when
owners of motor vehicles make their vehicles available to, and
those vehicles are under the operation and control of, a
personal vehicle sharing program's member, if an incident,
accident, or occurrence happens that gives rise to any
liability, the vehicle's owner and the private passenger
automobile insurer that insures the vehicle and its owner
shall be held harmless with no obligation to defend or
indemnify the motor vehicle's owner.
2.Would state further intent that a personal vehicle sharing
program shall maintain sufficient insurance coverage to cover
any loss arising out of the use of a privately owned passenger
vehicle during the time when the vehicle is under the
operation and control of the personal vehicle sharing program
and, at those times the personal vehicle sharing program shall
stand in the place of the vehicle owner or the vehicle owner's
private passenger automobile insurer.
3.Would provide that no private passenger motor vehicle insured
by its owner by a policy of insurance subject to specified
Insurance Code provisions applicable to private passenger
automobile insurance and uninsured and underinsured coverages,
shall be classified as a commercial vehicle, for-hire vehicle,
permissive use vehicle, or livery solely because its owner
allows it to be used for personal vehicle sharing as long as
all of the following circumstances apply:
a. The personal vehicle sharing is conducted pursuant
to a personal vehicle sharing program.
b. Any annual revenue received by the motor vehicle's
owner and generated by personal vehicle sharing of that
vehicle does not exceed the annual expenses of owning and
operating the vehicle, including depreciation, interest,
lease payments, auto loan payments, insurance,
AB 1871 (Jones), Page 3
maintenance, parking, fuel, cleaning, automobile repair,
and costs associated with personal vehicle sharing,
including, but not limited to, the installation,
operation, and maintenance of computer hardware and
software, signage identifying the vehicle as a personal
sharing vehicle, and any fees charged by a personal
vehicle sharing program.
4.Would define various terms, including:
a. "Personal vehicle sharing", which is define to mean
the use of private passenger motor vehicles by persons
other than the vehicle's owner, in connection with a
personal vehicle sharing program; and
b. "Personal vehicle sharing program", which is defined
to mean a legal entity qualified to do business in the
State of California engaged in the business of
facilitating the sharing of private passenger vehicles
for noncommercial use by individuals within the state.
5.Would provide that a personal vehicle sharing program shall,
for each private passenger vehicle that it facilitates the use
of, do all of the following:
a. During all times when the vehicle is engaged in
personal vehicle sharing, provide insurance coverage for
the vehicle that is equal to or greater than the
insurance coverages maintained by the vehicle owner and
reported to the personal vehicle sharing program, but in
no event, provide coverage less than three times the
minimum insurance requirements for private passenger
vehicles with respect to liability and uninsured motorist
coverage, and provide coverage equal to or greater than
the medical payment coverage and the physical damage
coverage, including collision and comprehensive coverage,
maintained by the vehicle owner and reported to the
personal vehicle sharing program.
b. Provide the registered owner of the vehicle with a
AB 1871 (Jones), Page 4
specified DMV form or other suitable proof of compliance
with the insurance requirements of this Act and the
California Financial Responsibility Law.
c. Collect, maintain, and make available to the vehicle
owner, the vehicle owner's primary automobile liability
insurer on file with the DMV, and to any other government
agency as required by law, at the cost of the personal
vehicle program, verifiable electronic records that
identify the date, time, initial and final locations of
the vehicle, and miles driven when the vehicle is under
the control of a person other than the vehicle's owner
pursuant to a personal vehicle sharing program.
d. Provide the vehicle's owner and any person that
operates the vehicle pursuant to a personal vehicle
sharing program with a disclosure that contains
information explaining the terms and conditions contained
in this section.
6.Would establish rules governing liabilities of the passenger
vehicle sharing program operator, the owner of the vehicle
being shared, and the insurer of the vehicle on behalf of the
owner.
7.Would provide that no policy of insurance subject to Section
11580.1 or 11580.2 shall be canceled, voided, terminated,
rescinded, or nonrenewed solely on the basis that the private
passenger motor vehicle has been made available for personal
vehicle sharing pursuant to a personal vehicle sharing
program.
COMMENTS
1.Purpose of the bill To permit carsharing companies to expand
their pool of vehicles by taking advantage of privately owned
vehicles while they are not in use.
2.Background . Carsharing companies have been growing in urban
areas across the country, as well as in California. These
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companies provide short-term rental use of vehicles by drivers
who have only minimal need to a personal vehicle, and do not
want to incur the expenses associated with owning and
maintaining a vehicle in an urban area.
3.However, under current law, if the owner accepts compensation
for allowing the vehicle to be used in a vehicle sharing
program, an insurer could reclassify the vehicle as a
commercial vehicle, and increase the premiums charged to the
owner. The bill is designed to enable the carsharing company
to enter into agreements with vehicle owners without adverse
consequences for the owner.The billis also intended to ensure
that the owner's private passenger automobile insurer is also
not disadvantaged when the vehicle is in use by the vehicle
sharing program.
4.Environmental benefits . According to the Environmental
Defense Fund and the Sierra Club, vehicle sharing programs are
one mechanism that can reduce the number of miles that are
driven in urban areas, thereby reducing emissions and
congestion. By making more options available, more people
will be able to meet their urban transportation needs without
having to own a car. The American Planning Association,
California Chapter, and the Community Action to Prevent Asthma
make similar points concerning reducing emissions and
encouraging carsharing.
5.Carsharing companies support . Companies such as Gettaround,
Inc., and City CarShare support the bill, which would enable
them to supplement or replace company owned fleets with
temporary use private vehicles owned by others during periods
when the owner does not need the vehicle. They point to
research that shows carsharing programs can reduce
participants' miles driven, thereby reducing greenhouse gases.
Creating this additional model for organizing a program will
encourage an expansion of these efforts.
6.Questions None
7.Suggested Amendments None
8.Prior and Related Legislation None
POSITIONS
AB 1871 (Jones), Page 6
Support
American Planning Association, California Chapter
City Carshare
Community Action to Fight Asthma
Environmental Defense Fund
Gettaround, Inc.
Relay Rides
Sierra Club
Spride
Oppose
None
Consultant: Kenneth Cooley (916) 651-4102