BILL ANALYSIS                                                                                                                                                                                                    



                                                                           
           AB 1871
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1871 (Jones)
          As Amended  August 20, 2010
          Majority vote
           
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          |ASSEMBLY:  |75-0 |(June 3, 2010)  |SENATE: |35-0 |(August 25,    |
          |           |     |                |        |     |2010)          |
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           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
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            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
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            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
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            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