BILL ANALYSIS
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THIRD READING
Bill No: AB 1871
Author: Jones (D)
Amended: 6/10/10 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 carsharing
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.
ANALYSIS :
Existing law
1. Requires owners and operators of private passenger
automobiles to maintain "financial responsibility,"
which usually takes the form of privately purchased
CONTINUED
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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. States legislative intent that that during the time when
owners of motor vehicles make their vehicles available
to, and those vehicles are under the operation and
control of, a personal vehicle sharing program's member,
if an incident, accident, or occurrence happens that
gives rise to any liability, the vehicle's owner and the
private passenger automobile insurer that insures the
vehicle and its owner shall be held harmless with no
obligation to defend or indemnify the motor vehicle's
owner.
2. States further intent that a personal vehicle sharing
program shall maintain sufficient insurance coverage to
cover any loss arising out of the use of a privately
owned passenger vehicle during the time when the vehicle
is under the operation and control of the personal
vehicle sharing program and, at those times the personal
vehicle sharing program shall stand in the place of the
vehicle owner or the vehicle owner's private passenger
automobile insurer.
3. Provides that no private passenger motor vehicle insured
by its owner by a policy of insurance subject to
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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 motor
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 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.
4. 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.
5. Provides that a personal vehicle sharing program shall,
for each private passenger vehicle that it facilitates
the use of, do all of the following:
A. During all times when the vehicle is engaged in
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personal vehicle sharing, provide insurance
coverage for the vehicle that is equal to or
greater than the insurance coverages maintained by
the vehicle owner and reported to the personal
vehicle sharing program, but in no event, provide
coverage less than three times the minimum
insurance requirements for private passenger
vehicles with respect to liability and uninsured
motorist coverage, and provide coverage equal to or
greater than the medical payment coverage and the
physical damage coverage, including collision and
comprehensive coverage, maintained by the vehicle
owner and reported to the personal vehicle sharing
program.
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 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.
6. Establishes rules governing liabilities of the passenger
vehicle sharing program operator, the owner of the
vehicle being shared, and the insurer of the vehicle on
behalf of the owner.
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7. 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
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
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Sierra Club
Spride, Inc.
ASSEMBLY FLOOR :
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 7/29/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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