BILL ANALYSIS AB 1871 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1871 (Jones) As Amended August 20, 2010 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |75-0 |(June 3, 2010) |SENATE: |35-0 |(August 25, | | | | | | |2010) | ----------------------------------------------------------------- Original Committee Reference: INS. SUMMARY : Authorizes private passenger motor vehicle owners to make their vehicle available for use by a personal vehicle sharing program (PVSP) without impacting the owners' private passenger automobile insurance policy. The Senate amendments : 1)Delete the intent language. 2)Adopt more consistent use of terminology throughout the bill (consistently using the phrase "private passenger motor vehicle" and the phrase "personal vehicle sharing program"). 3)Add criteria to the required elements to qualify as a PVSP that an owner not knowingly allow the vehicle to be used for a commercial purpose. 4)Define "private passenger motor vehicle." 5)Expand the duties of a PVSP by adding a duty to ensure that there is no commercial use of shared vehicles, and a duty to install appropriate equipment to monitor the use of the vehicle. 6)Specify that the PVSP is liable until the vehicle is returned to a location designated by the owner, and the earliest of: a) The contracted shared use time, b) The shared user returns it to the PVSP, or, c) The owner takes possession of the vehicle. 7)Provide that the PVSP assumes liability in the event of a AB 1871 Page 2 dispute about whether the vehicle was in use by a PVSP when the loss occurred. 8)Require the PVSP to defend the vehicle owner in the event that the owner is named as a defendant in any case where the loss occurred during PVSP use. 9)Specify that any insurer that insures a vehicle being used in a PVSP has the right to notify the owner that it will not defend or indemnify the owner for losses associated with use of the vehicle in the PVSP. 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. AS PASSED BY THE ASSEMBLY , this bill: 1)Contained declarations of legislative intent that the purpose of the bill is to hold a vehicle owner, and the vehicle owner's insurer, harmless for losses that occur while the vehicle is being used in a car sharing program. 2)Provided that no vehicle insured as a private passenger motor vehicle in compliance with the Financial Responsibility Law AB 1871 Page 3 shall be classified as a commercial or for-hire vehicle solely on the basis of the vehicle being used in a personal vehicle sharing program, provided that the revenue generated for the owner does not exceed the expenses of operating the vehicle. These expenses include lease or loan payments, insurance, parking, depreciation, fuel, maintenance and costs associated with the computer hardware and software required by the vehicle sharing program. 3)Required that the personal vehicle sharing organization maintain appropriate insurance for the periods that the vehicle is being used by any driver other than the owner. 4)Defined "personal vehicle sharing" as the use of privately owned vehicles by drivers other than the owner as part of a PVSP. 5)Specified that a PVSP is an entity that facilitates personal vehicle sharing, and that: a) Provides liability insurance for private vehicles when used by drivers other than the owner in amounts equal to or greater than what the owner maintains, but in no event less than three times the amount required of private passenger vehicles with respect to liability and uninsured motorist coverages, and equal to the amounts maintained by the owner with respect to medical payments and physical damage coverages; b) Provides the vehicle owner with appropriate proof of financial responsibility to satisfy Vehicle Code requirements; c) Collects and maintains verifiable electronic records that identify the date, time and location when a vehicle is being used by a driver who is not the owner; and, d) Provides the vehicle owner with a disclosure explaining the terms and conditions of the personal vehicle sharing law. 6)Specified that, notwithstanding any other provision of law or provision of the owner's insurance policy, the owner's automobile insurer is not liable under any circumstances for AB 1871 Page 4 any loss or event that occurs during a time when the vehicle is under the control of a driver who is not the owner pursuant to a personal vehicle sharing program. 7)Prohibited an insurer from canceling, rescinding, terminating, voiding, or nonrenewing an owner's automobile insurance policy due to the owner making the vehicle available for a personal vehicle sharing program. FISCAL EFFECT : This bill is tagged nonfiscal. COMMENTS : According to the author, the Senate amendments are the continued efforts by proponents and representatives of the insurance industry to make it crystal clear that the private insurance on a vehicle is not involved in any way when the vehicle is put to use by a PVSP. The Author and the insurers believe that they have achieved this goal, and the insurance industry is not opposed to the bill. Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086 FN: 0006763