BILL ANALYSIS
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THIRD READING
Bill No: AB 1871
Author: Jones (D)
Amended: 8/20/10 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 car-sharing
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.
Senate Floor Amendments of 8/20/10 establish a private
passenger vehicle sharing program and further refine how
its rules will dovetail with current insurance practice
affecting individuals.
ANALYSIS :
CONTINUED
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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.
This bill:
1. Provides that no private passenger motor vehicle insured
by its owner by a policy of insurance subject to
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 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
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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.
C. The owner of the private passenger motor vehicle
does not knowingly place the vehicle into
commercial use by a personal vehicle sharing user
while engaged in personal vehicle sharing.
2. 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.
C. "Private passenger motor vehicle" means a
vehicle that is insured, or is subject to being
insured, under a personal automobile liability
insurance policy insuring a single individual or
individuals residing in the same household, as the
named insured, but does not include a vehicle with
fewer than four wheels.
3. Provides that a personal vehicle sharing program shall,
for each private passenger vehicle that it facilitates
coverage for the vehicle and operator of vehicle that
are the use of, do all of the following:
A. During all times when the vehicle is engaged in
personal vehicle sharing, provide insurance equal to
or greater than the insurance coverage maintained by
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the vehicle owner and reported to the personal
vehicle sharing program, however, the personal
vehicle sharing program shall not provide liability
coverage less than three times the minimum insurance
requirements for private passenger vehicles.
Compliance with the terms and conditions of this bill
shall be deemed to avoid the application of the
limitation on damage recoveries set forth in Section
3333.4 of the Civil Code.
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 sharing
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.
E. Not knowingly permit the vehicle to be operated
for commercial use by a personal vehicle sharing
user while engaged in personal vehicle sharing.
F. Use only private passenger vehicles.
G. Facilitate the installation, operation, and
maintenance of computer hardware and software and
signage, necessary for a vehicle to be used in a
personal vehicle sharing program, including payment
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of the cost of damage or theft of that equipment
and any damage caused to the vehicle by the
installation, operation, and maintenance of that
equipment.
4. Provides in the event of a loss or injury that occurs
during any time period when the vehicle is under the
operation and control of a person, other than the
vehicle owner, pursuant to a personal vehicle sharing
program, or otherwise under the control of a personal
vehicle sharing program, the personal vehicle sharing
program shall assume all liability of the owner and
shall be considered the owner of the vehicle for all
purposes.
5. Specifies nothing in the bill limits the liability of
the personal vehicle sharing program for its acts or
omissions that result in injury to any persons as a
result of the use or operation of a personal vehicle
sharing program.
6. Requires a personal vehicle sharing program be liable
until both of the following occur:
A. The private passenger motor vehicle is returned
to a location designated by the personal vehicle
sharing program.
B. The earliest of one of the following occurs:
(1) The expiration of the time period
established for the particular use of the
vehicle.
(2) The intent to terminate the personal
vehicle sharing use is verifiably
communicated to the personal vehicle sharing
program.
(3) The vehicle's owner takes possession
and control of the vehicle.
7. Requires the personal vehicle sharing program assume
liability for a claim in which a dispute exists as to
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who was in control of the vehicle when the loss occurred
giving rise to the claim.
8. Requires the vehicle's private passenger motor vehicle
insurer indemnify the personal vehicle sharing program
to the extent of its obligation under the applicable
insurance policy, if it is determined that the vehicle's
owner was in control of the vehicle at the time of the
loss.
9. Requires, in the event that the owner of the vehicle is
named as a defendant in a civil action, for a loss or
injury that occurs during any time period when the
vehicle is under the operation and control of a person,
other than the vehicle's owner, pursuant to a personal
vehicle sharing program, or otherwise under the control
of a personal vehicle sharing program, the personal
vehicle sharing program shall have the duty to defend
and indemnify the vehicle's owner.
10.Provides, while a private passenger motor vehicle is
used by a person other than its owner pursuant to
personal vehicle sharing facilitated through a personal
vehicle sharing program, all of the following shall
apply:
A. The insurer of that vehicle on file with the
Department of Motor Vehicles may exclude any and
all coverage afforded pursuant to its policy.
B. The primary and excess insurer or insurers of
the owners, operators, and maintainers of the
private passenger motor vehicle used in a personal
vehicle sharing program shall have the right to
notify an insured that it has no duty to defend or
indemnify any person or organization for liability
for any loss that occurs during use of the vehicle
in a personal vehicle sharing program.
11.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
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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
Sierra Club
Spride, Inc.
ASSEMBLY FLOOR :
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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 8/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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