BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2293 (Bonilla) - Transportation Network Companies
Amended: July 2, 2014 Policy Vote: EU&C 10-0, INS 9-1
Urgency: No Mandate: No
Hearing Date: August 14, 2014
Consultant: Maureen Ortiz
SUSPENSE FILE. AS AMENDED.
Bill Summary: AB 2293 amends the Passenger Charter-party
Carriers' Act to require liability insurance coverage for
transportation network companies (TNC) and their drivers.
Fiscal Impact:
One-time costs of approximately $197,000 to the CPUC
(Special Fund)
One-time costs of $25,000 to CDI (Special Fund)
The California Public Utilities Commission (CPUC) has identified
costs of approximately $79,000 for the study, and about $118,000
for additional rule-making to bring CPUC regulations into
conformance with statute. The Department of Insurance indicates
expenses totaling $25,000 associated with the study.
Background: The Internet and the use of smartphones have
transformed the methods of which some individuals obtain
transportation. Instead of hailing a cab or calling a
reservation car service, a growing number of consumers are using
new app-based services that connect drivers with passengers.
With GPS and geolocation technology as the foundation of the
business model, companies such as Uber, Lyft, and Rideshare
enable customers to download an app that alerts participating
drivers in the area of the need for a ride. Drivers with their
TNC app turned on get a signal on their smartphones and can
accept or reject the ride request. The customer can see photos
of responding drivers and their vehicles, as well as customer
ratings of each driver and then accepts or rejects the driver.
When a passenger and driver make a match, the ride is provided
and payment is made electronically on the smartphone, with
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drivers getting a portion and the TNC keeping a percentage.
Drivers that provide these ride services use their own vehicles;
however, some TNC's provide the smartphone for the driver's use.
Existing law grants the CPUC the authority to supervise and
regulate charter-party carrier of passengers (CPC). Taxicabs
are excluded from the definition of charter-party carrier and
are instead regulated by cities and counties.
A recent CPUC decision 13-09-045 created a new category of CPC
called Transportation Network Companies (TNCs) defined as an
organization or corporation that provides prearranged
transportation services for compensation using an online-enabled
application or platform to connect passengers with drivers using
their personal vehicles. Among other things, the decision
defined specific safety measures, and requires TNCs to maintain
commercial liability insurance policies that provide at least $1
million per-incident coverage while transportation services are
being provided. However, that time period of when
transportation services are provided was not clearly defined.
Current law and CPUC decisions specify different insurance
requirements for categories of charter-party carrier vehicles
depending on seating capacity and use, including $750,000
commercial liability insurance for up to seven passengers, $1.5
million in coverage for up to 15 passengers, and $5 million for
16 or more passengers.
Proposed Law: Specifically, AB 2293 does the following:
1) Defines "transportation network company services" as the
period of time that commences when a participating driver logs
onto the TNCs application program and ceases when the driver
logs off the application program.
2) Defines three distinct time periods that comprise
transportation network company services and specifies the
insurance requirements for each of those time periods as
follows:
a) Period One : The time when a driver logs onto the TNC's
application program and continues as long as the driver has not
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yet accepted a match; and, the period of time after a matched
passenger exits the vehicle until the time the driver accepts
another match. The insurance coverage must include liability,
medical, comprehensive, collision, and uninsured/underinsured.
The policy must provide coverage of $750,000 for death, personal
injury, and property damage; but the CPUC will determine the
limits for the other coverages.
b) Period Two : The time from when the driver accepts a match
with a passenger until the time the driver picks up the matched
passenger. Insurance coverage limits are those imposed on by the
CPUC - currently $1 million.
c) Period Three : The time while the passenger is in the
vehicle. Insurance coverage limits are requirements imposed by
the CPUC - currently $1 million.
3) Requires the TNC to disclose to drivers the insurance
coverage and limits of liability that is being provided, and an
advisement that the driver's personal automobile insurance
policy may not provide coverage while the driver is making
himself or herself available for TNC services.
4) Allows the liability insurance coverage requirement to be
met by an insurance policy obtained by the TNC; an insurance
policy obtained by a participating driver specifically written
to cover Period One as specified; or by a combination or those
two options.
5) Provides that if a driver's insurance policy that meets the
coverage obligation lapses, the TNC's insurance policy will
provide all required coverage beginning with the first dollar of
a claim.
6) Provides that in the event of a loss or injury during the
provision of TNC services where the loss exceeds the policy
coverage requirements in AB 2293, the TNC or any affiliated
parent or subsidiary shall assume all liability above the
amounts of the policy coverage limits.
7) Clarifies that a driver's personal insurance policy will not
provide coverage during times when services are being provided
unless the coverage is separate and the policy specifically
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states that coverage for TNC service is being provided.
8) Requires the CPUC and the Department of Insurance to
collaborate on a study of TNC insurance to assess whether
coverage requirements are appropriate to the risk of TNC
services in order to promote data-driven decisions on insurance
requirements.
9) Prohibits a TNC from disclosing any personally identifiable
information of a passenger to a third party unless the following
apply: a) the customer knowingly consents; b) the information
is given pursuant to a legal obligation; or c) the disclosure is
to the commission and is required during an investigation of a
complaint.
10) States Legislative Intent that the Department of Insurance
expedite the review of any application for approval of
transportation network company insurance products.
11) Contains Legislative Findings that the CPUC has initiated
regulation of TNC's as a new category of charter-party carriers
and is continuing to develop appropriate regulations; it is the
intent of the Legislature to continue ongoing oversight of the
commission's regulations; and provides that the Legislature does
not intend to prohibit the commission from exercising its
rulemaking authority in a manner that is consistent with this
article.
12) Requires participating drivers to carry proof of insurance
with them at all times during the provision of TNC services, and
to provide this proof to any other party and to a police officer
in the event of an accident.
Related Legislation: AB 612 (Nazarian) would require all
charter-party carriers, including transportation network
companies (TNCs), to submit all of its drivers to a Department
of Justice criminal background check and to participate in the
Department of Motor Vehicles (DMV) Employer Pull Notice Program
(EPN).
Staff Comments: In its ruling in September 2013, the CPUC
required TNCs to carry $1 million of liability insurance
coverage, but did not provide a definition of what constitutes
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"providing transportation network services". AB 2293 has been
heard by two policy committees in the Senate - first the Energy,
Utilities and Commerce Committee, and then in the Senate
Insurance Company.
AB 2293 requires that the CPUC and the Department of Insurance
collaborate on a study of TNC insurance in order to support
data-driven decision making. The results of this study will
impact near and future commission decisions and will require
considerable collaboration between the two entities as well as
research into the details of TNC operations. The bill does not
specify any time frame for the completion of that study.
Additionally, since existing CPUC regulations do not
specifically define "providing TNC services" for purposes of
determining the times when liability insurance coverage is
necessary, the CPUC will need to revise its rules to incorporate
the definition contained in this measure.
The requirement that the Department of Insurance expedite
applications for TNC insurance products will result in other
applications for insurance products to become less of a priority
when adjusting workload at the department.
Amendments (as approved on August 14, 2014): Amendments require
the driver to maintain TNC insurance of $100/$300/$50 during the
period before there is a passenger match and to require the TNC
company to provide $1 million commercial liability coverage;
revise definition of activity time periods; provide a firewall
against the driver's personal insurance; and require a
disclosure to drivers that a personal auto policy will not
provide coverage for comp/collision damages.