California lawmakers have introduced a bill to revise long-standing insurance requirements for rideshare companies, aiming to lower ride costs for consumers and address what supporters describe as an outdated and costly system.
Senate Bill 371, authored by Senator Rick Cabaldon (D-West Sacramento), proposes scaling back a unique $1 million uninsured and underinsured motorist (UM/UIM) coverage requirement that applies only to transportation network companies (TNCs) like Uber and Lyft. The bill passed the state Senate unanimously and is now advancing through the Assembly, where it has undergone amendments to modestly increase the proposed minimum coverage levels. "Affordability is the top concern I hear from constituents," Cabaldon said. "People are using TNC services more than ever before for everyday transportation… Likewise, TNC drivers are seeing the high cost of state-mandated uninsured/underinsured motorist insurance eat into their bottom line, and riders are seeing the cost of their rides increasing."
According to bill analysis, the $1 million UM/UIM coverage requirement was originally enacted in 2014 when the TNC industry was still in its infancy and was seen as a necessary safeguard for rideshare passengers. However, supporters of SB 371 argue that today, the mandate has become misaligned with actual risk—and is helping fuel inflated legal settlements, unnecessary litigation, and rising costs for drivers and riders alike.
The bill would reduce the UM/UIM mandate from $1 million to $100,000 per person and $300,000 per incident during the period when a passenger is in the vehicle—bringing it in line with California’s broader financial responsibility limits set to take effect in 2035. Uber and Lyft, two of the state's largest rideshare platforms, say the current insurance framework is driving unsustainable cost pressures. Uber told lawmakers that as much as 45% of a fare in Los Angeles goes toward insurance, while Lyft estimates $6 of every ride in California—double the national average—is spent on mandated insurance premiums. Lyft wrote in support of the bill, stating that "UM/UIM limits can be restructured and modernized to maintain affordability without sacrificing necessary protections for rideshare users."
Opponents argue that the bill could leave passengers without sufficient compensation in serious accidents. They point to California's high uninsured motorist rate—estimated at 17%—and a lack of publicly available data on claims outcomes. Critics also cite a 2017 joint report by the Department of Insurance and California Public Utilities Commission (CPUC) that found UM/UIM claims were among the highest-severity insurance claims for TNCs, calling them "an essential component" of the coverage package. Supporters include organizations such as Bay Area Council, several chambers of commerce, Lyft, Uber, and civic organizations like NAACP California-Hawaii State Conference. The bill continues to face resistance from other consumer and labor groups; however, recent amendments may help broaden support as it moves forward.
SB 371 maintains other key insurance protections, including $1 million in liability coverage for bodily injury and property damage. Passengers would also retain access to their own personal auto insurance or other coverage if damages exceed new limits. As part of a compromise, Cabaldon's bill now requires a joint study by CPUC and Department of Insurance on UM/UIM impacts with findings due by December 31, 2030. The bill is set to sunset in 2031 unless renewed.