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California bill slashes required UM/UIM coverage for TNCs like Uber and Lyft

7/2/26

By: Shiloh Wallack

Passed at the end of 2025 and effective January 1, 2026, Senate Bill 371 was approved by Governor Newsom, which acted as an amendment to Section 5433 of the Public Utilities Code relating to transportation. Previously, existing California law provided for specific requirements for liability insurance coverage on Transportation Network Companies (“TNCs”) – such as Uber and Lyft – and their drivers, including uninsured/underinsured (UM/UIM) motorists coverage in the amount of $1M from the moment a passenger enters the vehicle to the moment they exit. This new bill lowers that amount to $60,000 per-person and $300,000 per-occurrence in an attempt to lower operating costs for rideshare companies.

UM/UIM coverage protects individuals if they are in an accident with an at-fault driver who has no insurance (UM) or insufficient coverage (UIM) and can provide coverage to pay for medical bills, lost wages, and pain and suffering. It is often overlooked by consumers when they obtain automobile liability insurance as they may be more focused on protecting themselves if they cause an accident. But UM/UIM coverage allows drivers to be in control of the insurance available to them if they are injured in an accident. The last thing anyone wants is to be involved in a five-car accident and then learn that the at-fault party either has no insurance or insufficient coverage to compensate all involved parties.

Just as there is the trade-off between additional premium costs and more coverage when consumers are considering purchasing UM/UIM coverage, the reduction in coverage provided under Senate Bill 371 has both pros and cons. On one hand, the reduction in required coverage limits aims to lower operating costs for rideshare companies, thereby leading to reduced fares for users. However, said reduction draws concerns over the ability of injured passengers to be fully compensated in the event of an accident. If a driver or rider is involved in a serious accident caused by someone without insurance or insufficient insurance, the reduced coverage might not cover the full extent of injuries and damages, leaving them with limited financial recourse. However, individuals can still mitigate this risk through their own personal UM/UIM coverage. Many policies allow insureds access to UM/UIM coverage even while not operating the vehicle insured under that policy. Consumers should review their insurance policies closely to understand the coverages they have and discuss any questions or concerns with an insurance agent, broker, or their carrier.

In short, while the reduction in coverage amounts may lead to more affordable rideshare costs for passengers, and lower operating costs for the TNCs, passengers may find themselves without adequate protection if they are involved in a rideshare accident. Californians should carefully review the available UM/UIM coverage for whichever TNC they’re planning on using and review their own policies to ensure they are adequately covered for their individual needs.

For more information on this topic, please contact Shiloh Wallack or your local FMG relationship partner.

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.