SB 371 creates a single statutory framework for transportation network company (TNC) insurance in California, dividing app activity into two coverage windows and assigning clear primary-responsibility rules. The law requires TNCs and participating drivers to carry designated “transportation network company insurance,” and makes the company the backstop if a driver’s qualifying policy lapses or never existed.
The statute matters because it replaces ambiguity about which policy pays first, imposes verification duties on companies that rely on driver policies, and establishes insurer defense obligations. For risk managers, insurers, and compliance teams, the bill shifts operational responsibilities to TNCs while formalizing thresholds for coverage and claims handling.
At a Glance
What It Does
SB 371 splits the app lifecycle into two distinct insurance windows (the period after a driver accepts a ride request and the period when a driver is logged on but not yet on-trip) and prescribes primary insurance obligations tied to those windows. It also requires TNCs to provide a backstop where driver coverage is absent or lapses and to verify any driver policies they count on.
Who It Affects
This targets TNCs and their participating drivers, insurers that underwrite TNC-specific or commercial ride-sharing endorsements, claims professionals handling crash liability and uninsured/underinsured motorist claims, and corporate risk/compliance teams at platforms.
Why It Matters
The bill removes uncertainty over which policy pays first, creates new verification and documentation work for platforms, and forces insurers to accept pre-defined defense and indemnity roles — all of which will affect underwriting, pricing, and claims workflows for ride-hailing across California.
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What This Bill Actually Does
SB 371 imposes a structured, operational regime for insurance tied to app activity rather than to vague notions of ‘‘business use.’’ The statute requires TNCs and drivers to maintain insurance identified as transportation network company insurance and draws bright lines around when that insurance must respond. Rather than leaving claimants to chase layered personal and commercial policies, the bill charges named insurers with defined defense and indemnity obligations for covered incidents occurring during the app-defined windows.
The law also makes verification a compliance step: a TNC may rely on a driver’s policy only after checking that the policy specifically covers ride-service use. If that verification fails or a driver policy lapses, the company must step in at once to provide coverage.
That creates operational obligations for platforms: continuous policy monitoring, documentation retention, and automated gatekeeping to prevent drivers without qualifying coverage from accepting rides.SB 371 changes how claims get handled. Insurers that write the relevant transportation-network policy must defend claims arising in the applicable windows, and the statute limits shifting defense responsibilities across multiple carriers for the same incident during certain periods.
The measure also preserves civil liability beyond policy limits — claimants can still pursue damages above the insurance caps — so coverage is a floor, not a ceiling, for recoveries.Finally, the bill restricts reliance on a personal automobile insurer’s internal denial process. Platforms cannot require a claimant or a driver’s personal carrier to deny a claim before TNC coverage kicks in.
That provision accelerates claim payments and reduces disputes over primacy, but it also increases immediacy of financial exposure for companies and their insurers.
The Five Things You Need to Know
From the moment a driver accepts a ride request until the ride ends or the app transaction is completed, the bill requires primary transportation network company insurance of $1,000,000 for death, personal injury, and property damage.
While a passenger is in the vehicle, the TNC must provide uninsured and underinsured motorist coverage of $60,000 per person and $300,000 per incident as the company’s sole obligation for UM/UIM claims.
During logged-on-but-not-on-trip periods the statute mandates primary limits of $50,000 per person/$100,000 per incident for bodily injury and $30,000 for property damage, plus a $200,000 per-occurrence excess policy that covers liability above those logged-on limits.
The bill forbids conditioning TNC coverage on a driver’s personal-auto insurer first denying a claim and requires the company to provide first-dollar coverage whenever a qualifying driver policy has lapsed or ceased to exist.
Insurers issuing the insurance that covers the logged-on periods are the only insurers with the duty to defend liability claims for accidents in those periods; insurers covering on-trip incidents have an explicit duty to defend and indemnify their insureds.
Section-by-Section Breakdown
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On-trip primary coverage and UM/UIM obligation
This section governs the window beginning when a driver accepts a ride request and ending when the trip is complete or the app transaction is finished, whichever is later. It imposes a single-source primary obligation for high-limit liability tied to that window and separately assigns responsibility for uninsured and underinsured motorist claims to the company for the duration that passengers are in the vehicle. Practically, carriers and platforms must coordinate to ensure claims that arise while a passenger is aboard are triaged to the company’s policy first, minimizing battles over primacy at the point of claim.
Logged‑on periods: minimum liability limits and excess coverage
This provision covers the ‘waiting’ and ‘between‑rides’ windows when drivers are logged into the app but not yet on-trip. It sets lower primary limits for liability during these periods and requires the TNC to maintain an excess layer to pick up amounts above those limits. The statute also centralizes defense responsibility for accidents occurring in these logged-on windows, which simplifies claimant strategy but concentrates litigation exposure on the designated insurer and the platform.
No subordination to personal-auto denials
The bill bars conditioning TNC coverage on a driver’s personal-auto policy first denying a claim. That removes a common sequencing dispute in claims handling and accelerates access to the TNC’s coverage, but it also forces companies and their insurers to process and potentially pay claims earlier in the claims lifecycle rather than awaiting resolution from a personal carrier.
Company first-dollar responsibility on driver policy lapse
If a driver’s transportation‑network policy has lapsed or ceased to exist, the TNC must provide coverage starting at the first dollar of loss. This is a strict backstop: platforms cannot shift risk onto victims or onto a claimant to wait for a personal carrier’s denial; the company’s obligation is immediate and covers the relevant statutory period.
Preserving civil liability beyond policy limits
The statute explicitly states that the prescribed insurance requirements do not cap potential liability in a damages action. Claimants retain the right to sue for amounts above the insurance limits, meaning insurers and companies face both immediate indemnity obligations under the policies and potential excess judicial liability that can exceed the statutory floors.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Passengers and crash victims — they get clearer, prioritized sources of recovery and faster access to company-provided coverage during rides and while in the vehicle, reducing delays tied to inter-carrier disputes.
- Claims professionals and plaintiff attorneys — standardized primacy rules and a defined duty-to-defend simplify litigation positioning and can shorten pre-suit negotiation windows.
- Regulators and consumer advocates — the statute creates a clear regulatory baseline that reduces variance across carriers and platforms, making supervision and consumer protection enforcement more straightforward.
Who Bears the Cost
- Transportation network companies — they inherit increased financial exposure, verification obligations, and operational costs to monitor driver policies and to provide first-dollar coverage when driver policies lapse.
- Participating drivers — drivers will face stricter evidentiary requirements for their personal or commercially endorsed policies and may see higher premiums or reduced availability of affordable endorsements.
- Insurers underwriting TNC or driver transportation‑network policies — they will carry concentrated defense obligations and layered coverage exposure, which can raise loss costs and prompt changes in underwriting appetite or pricing.
- State regulators and compliance teams — agencies and internal compliance units will need to invest in oversight systems and auditing capacity to enforce verification, documentation, and timely claim-handling requirements.
Key Issues
The Core Tension
SB 371 balances two legitimate goals — rapid, reliable recovery for crash victims and predictable, priced risk for platforms and insurers — but the measures that protect victims (primary, first‑dollar company coverage and strict verification) also shift financial and administrative burdens onto TNCs, drivers, and insurers, creating a trade-off between consumer protection and the cost/complexity of providing ride-hailing services.
The bill cleans up primacy disputes but creates operational and legal frictions that will surface at implementation. First, the verification requirement that a driver’s policy be ‘‘specifically written’’ to cover TNC use puts a compliance burden on platforms: they must continuously validate policy language, track endorsements, and detect cancellations in real time.
That drives investment in data feeds and auditing and raises the risk of coverage gaps if verification processes lag.
Second, assigning sole defense duties for certain windows concentrates litigation leverage and incentivizes coverage disputes about when an accident occurred relative to app status. Determining whether an incident falls into the ‘accepted ride,’ ‘logged on,’ or ‘offline’ window may hinge on app timestamps, GPS traces, or disputed driver conduct — all evidentiary hotspots that will generate early litigation.
The requirement that TNC coverage be primary and first-dollar in many instances will accelerate payments but also increase upfront losses for companies and their insurers, potentially translating into higher costs passed to drivers or consumers.
Finally, the bill leaves open practical questions about ambiguous phrases in the operative text (for example, what constitutes ‘‘complet(ing) the transaction on the online-enabled application’’), the administrative mechanisms for proving coverage in cross-border or multi-jurisdictional incidents, and how this state-level regime interacts with existing commercial or personal policies drafted under different legal expectations. Those gaps will drive litigation, regulatory guidance, and market responses that shape the real-world effect of the statute.
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