On October 3, 2025, what ridesharing services such as Lyft and Uber consider to be significant regulatory reforms became effective. Specifically, Senate Bill 371 as enacted reduces insurance requirements for Uber, Lyft, and other ridesharing services and their drivers. These companies tout the lower insurance requirements as ways to reduce the costs of ridesharing to their customers. However, the changes may impair the ability of wreck victims to obtain compensation for their injuries and ultimately spur more liability for ridesharing companies..
Uninsured and Underinsured Motorist Coverage: The Basics.
The new law reduces the required minimum limits for uninsured and underinsured motorist coverage which the ridesharing companies, known as “transportation network companies,” must provide. To understand how Senate Bill 371 affects injured passengers, consider first the purpose of uninsured and underinsured motorist coverage.
Injured drivers tap into uninsured motorist coverage when an at-fault driver does not have the required minimum liability insurance. California law requires motorists to have bodily injury liability coverage of at least $30,000 per injured person and $60,000 per incident.
Underinsured motorist coverage takes effect when the tortfeasor has at least the minimum liability coverage, but that coverage does not pay all of the damages. For instance, suppose a single plaintiff suffers $60,000 in damages from medical expenses, lost wages, and pain and suffering in a wreck with one at-fault motorist. With the at-fault driver having purchased only the minimum liability coverage, the victim would have a claim against the underinsured motorist carrier for $30,000. An injured party must exhaust the liability insurance before pursuing an underinsured motorist claim.
Uninsured motorist coverage and underinsured motorist coverage typically come with the injured party’s automobile insurance. The would-be plaintiff must prove the negligence of the at-fault driver. Auto insurers in California must offer it, but the car owner may decline it.
How Uninsured and Underinsured Motorist Coverage Applies When the Victim is a Ridesharing Passenger:
California law requires transportation network companies such as Lyft and Uber to provide uninsured and underinsured motorist coverage for their drivers. That is, the uninsured and underinsured motorist coverage benefits a passenger using the service, but the coverage exists on a vehicle not belonging to the passenger.
How Ridesharing Works:
To make sense of this, consider how transportation network companies operate.
Drivers for Uber, Lyft, and other transportation network companies use their personal cars to carry passengers to various destinations. With an app, the passenger requests service from the transportation network company. The app finds the nearest driver, who then takes the passenger to the desired destination. The network companies pay the drivers based upon miles driven, location of rides, and the times at which the trips occur. Drivers can earn more trips and more pay by spending more time “online” through the ridesharing app.
For an injured ridesharing passenger, uninsured and underinsured motorist coverage applies when someone other than the rideshare driver is a fault. If a third party actually caused the injuries, a plaintiff first exhausts the $30,000 liability limits of the at-fault driver, assuming that driver has the minimum liability coverage. Afterwards, the underinsured motorist coverage contributes to the victim’s compensation.
The Changes:
With the enactment of Senate Bill 371 come reduced uninsured and underinsured coverage requirements. Specifically, Lyft, Uber, and other transportation network companies must provide uninsured and underinsured motorist coverage with the following minimum limits:
- $60,000 per person for bodily or personal injuries
- $300,000 per occurrence for bodily or personal injuries
Previously, the minimum underinsured or uninsured motorist coverages for drivers of ridesharing companies stood at $1 million. By contrast, owners of personal automobiles needed only $30,000 per person and $60,000 per accident — that is, if they purchased the policy. These limits still apply to all other passenger vehicles in California.
This means that, when the rideshare driver does not cause the wreck, a passenger at most can obtain $90,000 in compensation for injuries. This consists of the exhausted $30,000 from the liability carrier of the at-fault driver and $60,000 maximum from the underinsured motorist carrier. If the at-fault driver did not have liability insurance at all, recovery becomes capped at $60,000.
Depending on the seriousness of the injuries, uninsured or underinsured motorist coverage might not adequately compensate a rideshare passenger. The National Safety Council places the average cost, including lost wages and medical expenses, of a “disabling” injury from a motor vehicle crash at $167,000. Such injuries involve fractures, significant blood loss, paralysis, and other conditions that prevent the injured party from engaging in normal activities for at least one day. Even less serious injuries can cost on average an estimated $44,000 in economic losses to an injured person.
Holding the Rideshare Driver at Fault:
Uninsured and underinsured motorist coverage does not pay when the rideshare driver is at fault. In the event of the rideshare driver’s negligence, the injured passenger looks to the liability insurance on the Uber or Lyft vehicle. When the injured party is a passenger in the rideshare vehicle, the minimum liability coverage for the vehicle stands at $1 million.
With the disparity between uninsured/underinsured motorist coverage and liability coverage, personal injury lawyers representing plaintiffs likely would scrutinize the liability of the rideshare driver. Many aspects of ridesharing lend themselves to negligence on the part of the driver. These may include:
- Distractions: Smartphones represent a significant part of the rideshare driver’s tools. By one study, roughly one in every five drivers acknowledged using a phone while driving. Drivers rely on the phones to locate passengers or navigate routes in unfamiliar surroundings. This enhances the risk of rear-end collisions, which represent nearly two out of every five incidents involving rideshare drivers.
- Fatigue: The long hours that rideshare drivers spend finding and transporting passengers can contribute to drowsiness and fatigue. In such conditions, rideshare drivers fail to keep vehicles in their lanes or otherwise control them or react in sufficient time to avoid crashes. According to the National Safety Council, drowsiness contributed to nearly 18 percent of fatal crashes between 2017 and 2021. The National Highway Traffic Safety Administration says that 633 people died in crashes involving drowsy drivers.
- Lack of driving experience: Worldmetrics.org reports that drivers between the ages of 25 and 44 years old constitute 65 percent of rideshare drivers. According to a 2022 National Highway Safety Traffic Administration report, drivers between the ages of 21 and 34 years old represented a combined 38 percent of cell phone-distracted drivers involved in fatal crashes.
Much of this discussion assumes that one driver stands at fault. Plaintiffs’ lawyers may look to multiple defendants where the incident involves multiple tortfeasors. The liability policies of the at-fault drivers can increase the available resources to help compensate injured rideshare passengers.
