BILL ANALYSIS
AB 1871
Page 1
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 1871 (Jones) - As Amended: April 28, 2010
SUBJECT : Automobile insurance: personal vehicle sharing
SUMMARY : Authorizes private passenger automobile owners to
make their vehicle available for use by a vehicle sharing
program without impacting the owners' private passenger
automobile insurance policy. Specifically, this bill :
1)Provides that no vehicle insured as a private passenger motor
vehicle in compliance with the Financial Responsibility Law
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 and maintenance.
2)Requires 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.
3)Defines "personal vehicle sharing" as privately owned vehicles
that are allowed to be used by drivers other than the owner as
part of a communal pool of vehicles.
4)Specifies that a personal vehicle sharing program 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 by the Financial
Responsibility Law;
b) Provides the vehicle owner with appropriate proof of
financial responsibility to satisfy Vehicle Code
requirements; and
c) Collects and maintains verifiable electronic records
that identify the date, time and location when a vehicle is
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being used by a driver who is not the owner.
5)Specifies 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
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.
6)Prohibits 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.
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.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose . According to the author, carsharing companies would
like to expand their pool of vehicles by taking advantage of
privately owned vehicles while they are not in use. However,
under current law, if the owner accepted compensation for
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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, and ensure that the owner
is not disadvantaged. Further, the bill is designed 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.
2)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.
3)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.
4)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.
5)Insurers remain opposed without further amendments . The
insurers recognize that the bill contains provisions that
attempt to provide them protection against inappropriate
liability. However, they point to additional issues, such as
how the mandatory rating factor of "miles driven" enacted by
Proposition 103 is impacted by a proposal that has as its
purpose additional miles driven on their insureds' cars. They
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also note that the bill's protections address liability, but
not theft or vandalism to the vehicle, or property damage to
the vehicle itself. However, both the Association of
California Insurance Companies and the Pacific Association of
Domestic Insurance Companies, the only insurers to communicate
with the Committee, have expressed the desire to work with the
author on this "innovative idea."
REGISTERED SUPPORT / OPPOSITION :
Support
American Planning Association, California Chapter
City Carshare
Community Action to Fight Asthma
Environmental Defense Fund
Gettaround, Inc.
Relay Rides
Sierra Club
Spride
Opposition
Association of California Insurance Companies (unless amended)
Pacific Association of Domestic Insurance Companies (unless
amended)
Personal Insurance Federation of California (unless amended)
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086