BILL ANALYSIS
AB 1871
Page 1
ASSEMBLY THIRD READING
AB 1871 (Jones)
As Amended May 11, 2010
Majority vote
INSURANCE 7-2
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|Ayes:|Solorio, Blakeslee, | | |
| |Caballero, Carter, Feuer, | | |
| |Hayashi, Niello | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Anderson, Hagman | | |
| | | | |
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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)Contains 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 carsharing program.
2)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.
3)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.
4)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.
5)Specifies that a personal vehicle sharing program is an entity
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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
being used by a driver who is not the owner.
6)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.
7)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
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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)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 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)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)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)Companies such as Gettaround, Inc., and City CarShare support
the bill, which would enable them to supplement or replace
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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)The insurers, who have "oppose unless amended" positions,
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
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 have expressed the desire to work
with the author on this "innovative idea."
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0004279