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Is California About to Disrupt Uber?

Uber, the car service juggernaut disrupting the taxi industry, is facing some unwanted disruption from state politicians. Late Wednesday, California’s Senate Committee on Insurance voted nine to one to advance a bill imposing new insurance requirements on app-based ride-sharing companies, such as Uber, Lyft, and Sidecar. The bill passed the California Assembly unanimously last month.

Under the proposed new law, AB 2293, commercial insurance from the ride company would have to be active and primary “from the moment a participating driver logs on” to the app—not just when a passenger is in the car. Supporters cite the case of six-year-old Sofia Liu, who was hit and killed in a San Francisco crosswalk on New Year’s Eve; the girl’s family sued Uber, claiming the company’s app distracted the driver, who was between rides. The driver was insured, but Uber refused to provide supplemental insurance protection on grounds that the driver had no passenger during the accident. Uber has since instituted some coverage that starts when the app is turned on, but the coverage applies only when a driver’s personal insurance policy won’t pay.