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Law Requiring Ridesharing Company Drivers To Carry Minimum-Level Insurance Passes

SACRAMENTO (CBS SF) -- Drivers for ride-sharing companies such as Uber and Lyft must carry minimum levels of insurance under a new state law that will take effect next summer.

Gov. Jerry Brown announced Wednesday that he had signed AB2293 by Democratic Assemblywoman Susan Bonilla of Concord.

Last month the transportation networking companies (TNC) reached a compromise with legislators. The bill mainly effects periods when drivers for the TNCs -- companies that connect paid drivers to passengers through a smartphone app -- have their app turned on and are looking for customers but have not yet picked up a passenger.  It also establishes requirements for the types of insurance drivers must carry.

Taxi drivers have complained that ride-sharing companies have not had to play by the same rules, including insurance standards. The legislation prompted initial opposition from transportation startups that said it would stifle innovation.

The issue drew attention in San Francisco earlier this year when Uber driver Syed Muzzafar, 57, struck and killed 6-year-old Sofia Liu the night of Dec. 31.

Uber has continued to argue in court that because Muzzafar was not carrying a passenger during the crash, despite having his Uber app activated, the company was not liable for damages, despite changing its policy to cover drivers during those circumstances.

Uber and Lyft ultimately supported Bonilla's bill after she agreed to lower the amount of insurance that is required when drivers do not have passengers in their vehicles.

Insurance policies enacted by Uber and Lyft this year allowed for $50,000 per injury in an accident with up to $100,000 covered, and $25,000 for property damage while the app was activated but before the driver had picked up a passenger.

Once a passenger was in the car, the policy would go up to $1 million of liability coverage per incident with $50,000 of contingent collision coverage, depending on the driver's personal policy.

At all other times, the driver's personal auto insurance policy is in effect.

AB2293 also clarifies that the Public Utilities Commission has oversight over ride-sharing companies.

© Copyright 2014 The Associated Press and Bay City News Service. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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