BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                                 THIRD READING


          Bill No:  AB 1871
          Author:   Jones (D)
          Amended:  8/20/10 in Senate
          Vote:     21

           
           SENATE BANKING, FINANCE, AND INS. COMMITTEE  :  10-0, 6/30/10
          AYES:  Calderon, Cogdill, Correa, Florez, Kehoe, Liu,  
            Lowenthal, Padilla, Price, Runner
          NO VOTE RECORDED:  Cox

           ASSEMBLY FLOOR  :  75-0, 6/3/10 - See last page for vote


           SUBJECT  :    Motor vehicle insurance coverage:  personal  
          vehicle sharing

           SOURCE  :     Author


           DIGEST  :    This bill facilitates the ability of car-sharing  
          companies to expand their pool of vehicles by taking  
          advantage of privately owned vehicles while they are not in  
          use with no adverse consequences for the owners of those  
          vehicles or the owners' insurer.

           Senate Floor Amendments  of 8/20/10 establish a private  
          passenger vehicle sharing program and further refine how  
          its rules will dovetail with current insurance practice  
          affecting individuals.

           ANALYSIS  :    

                                                           CONTINUED





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           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 nonprofit organization.

          This bill:

          1. Provides 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 coverage, 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 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  







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                payments, insurance, 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.

             C.    The owner of the private passenger motor vehicle  
                does not knowingly place the vehicle into  
                commercial use by a personal vehicle sharing user  
                while engaged in personal vehicle sharing.

          2. 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.

             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.

             C.    "Private passenger motor vehicle" means a  
                vehicle that is insured, or is subject to being  
                insured, under a personal automobile liability  
                insurance policy insuring a single individual or  
                individuals residing in the same household, as the  
                named insured, but does not include a vehicle with  
                fewer than four wheels.

          3. Provides that a personal vehicle sharing program shall,  
             for each private passenger vehicle that it facilitates  
             coverage for the vehicle and operator of vehicle that  
             are the use of, do all of the following:

             A.    During all times when the vehicle is engaged in  
                personal vehicle sharing, provide insurance equal to  
                or greater than the insurance coverage maintained by  







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                the vehicle owner and reported to the personal  
                vehicle sharing program, however, the personal  
                vehicle sharing program shall not provide liability  
                coverage less than three times the minimum insurance  
                requirements for private passenger vehicles.   
                Compliance with the terms and conditions of this bill  
                shall be deemed to avoid the application of the  
                limitation on damage recoveries set forth in Section  
                3333.4 of the Civil Code.

             B.    Provide the registered owner of the vehicle with  
                a 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 sharing  
                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.

             E.    Not knowingly permit the vehicle to be operated  
                for commercial use by a personal vehicle sharing  
                user while engaged in personal vehicle sharing.

             F.    Use only private passenger vehicles.

             G.    Facilitate the installation, operation, and  
                maintenance of computer hardware and software and  
                signage, necessary for a vehicle to be used in a  
                personal vehicle sharing program, including payment  







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                of the cost of damage or theft of that equipment  
                and any damage caused to the vehicle by the  
                installation, operation, and maintenance of that  
                equipment.

          4. Provides in the event of a loss or injury that occurs  
             during any time period when the vehicle is under the  
             operation and control of a person, other than the  
             vehicle owner, pursuant to a personal vehicle sharing  
             program, or otherwise under the control of a personal  
             vehicle sharing program, the personal vehicle sharing  
             program shall assume all liability of the owner and  
             shall be considered the owner of the vehicle for all  
             purposes.

          5. Specifies nothing in the bill limits the liability of  
             the personal vehicle sharing program for its acts or  
             omissions that result in injury to any persons as a  
             result of the use or operation of a personal vehicle  
             sharing program.

          6. Requires a personal vehicle sharing program be liable  
             until both of the following occur:

             A.    The private passenger motor vehicle is returned  
                to a location designated by the personal vehicle  
                sharing program.

             B.    The earliest of one of the following occurs:

                (1)      The expiration of the time period  
                   established for the particular use of the  
                   vehicle.

                (2)      The intent to terminate the personal  
                   vehicle sharing use is verifiably  
                   communicated to the personal vehicle sharing  
                   program.

                (3)      The vehicle's owner takes possession  
                   and control of the vehicle.

          7. Requires the personal vehicle sharing program assume  
             liability for a claim in which a dispute exists as to  







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             who was in control of the vehicle when the loss occurred  
             giving rise to the claim.

          8. Requires the vehicle's private passenger motor vehicle  
             insurer indemnify the personal vehicle sharing program  
             to the extent of its obligation under the applicable  
             insurance policy, if it is determined that the vehicle's  
             owner was in control of the vehicle at the time of the  
             loss.

          9. Requires, in the event that the owner of the vehicle is  
             named as a defendant in a civil action, for a loss or  
             injury that occurs during any time period when the  
             vehicle is under the operation and control of a person,  
             other than the vehicle's owner, pursuant to a personal  
             vehicle sharing program, or otherwise under the control  
             of a personal vehicle sharing program, the personal  
             vehicle sharing program shall have the duty to defend  
             and indemnify the vehicle's owner.

          10.Provides, while a private passenger motor vehicle is  
             used by a person other than its owner pursuant to  
             personal vehicle sharing facilitated through a personal  
             vehicle sharing program, all of the following shall  
             apply:

             A.    The insurer of that vehicle on file with the  
                Department of Motor Vehicles may exclude any and  
                all coverage afforded pursuant to its policy.

             B.    The primary and excess insurer or insurers of  
                the owners, operators, and maintainers of the  
                private passenger motor vehicle used in a personal  
                vehicle sharing program shall have the right to  
                notify an insured that it has no duty to defend or  
                indemnify any person or organization for liability  
                for any loss that occurs during use of the vehicle  
                in a personal vehicle sharing program.

          11.Provides 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  







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             personal vehicle sharing program.

           Background
           
          Carsharing companies have been growing in urban areas  
          across the country, as well as in California.  These  
          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.

          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  
          bill is 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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  7/29/10)

          American Planning Association, California Chapter
          City Carshare
          City of sacramento
          CommonSource
          Community Action to Fight Asthma
          Consumer Attorneys of California 
          Divvy.com
          Environmental Defense Fund
          Gettaround, Inc.
          Go-Op, Inc.
          National Resources Defense Council
          Relay Rides
          Sierra Club
          Spride, Inc.


           ASSEMBLY FLOOR  : 







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          AYES:  Adams, Ammiano, Anderson, Arambula, Bass, Beall,  
            Bill Berryhill, Blakeslee, Block, Blumenfield, Bradford,  
            Brownley, Buchanan, Caballero, Charles Calderon, Carter,  
            Chesbro, Conway, Cook, Coto, Davis, De Leon, DeVore,  
            Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,  
            Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,  
            Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,  
            Huffman, Jeffries, Jones, Knight, Lieu, Logue, Bonnie  
            Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,  
            Niello, Nielsen, Norby, V. Manuel Perez, Portantino,  
            Ruskin, Saldana, Silva, Skinner, Smyth, Solorio, Swanson,  
            Torlakson, Torres, Torrico, Tran, Villines, Yamada, John  
            A. Perez
          NO VOTE RECORDED:  Tom Berryhill, De La Torre, Salas, Audra  
            Strickland, Vacancy


          JJA:do  8/23/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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