Personal Car-Share Insurance Bill Passes Key Committee Test

The possibility that Californians will be allowed to share their personal cars within car-sharing pools and receive compensation for gas, maintenance, and wear to the vehicle moved a step closer to reality yesterday, as a State Senate committee voted unanimously to approve AB 1871, a bill that would prevent car insurance companies from voiding personal insurance if vehicle owners are compensated for the use of their cars.

California Assemblymember and Democratic candidate for insurance commissioner Dave Jones (D-Sacramento) has been working with insurance companies and fellow lawmakers to pass the legislation that in theory could dramatically change the nature of vehicle ownership for drivers participating in personal car-share. Jones and other supporters imagine the bill will pave the way for reduced car-ownership, particularly in suburban areas, as social networks or church groups, for instance, make use of private vehicles, which otherwise spend an average of 90 percent of the time idle.

Supporters contend that removing the barrier to personal car-share will be an economic help to vehicle owners and will spur entrepreneurial innovations. Personal vehicle sharing in theory could be tailored as specifically or as generally as each participant wished.

"It’s technically feasible and economically viable to have an
arrangement where you decide that the only people you want to share your
car are your Facebook friends or some other universe that is a part of
your social network," Jones told Streetsblog.

After the bill flew through the Assembly with unanimous support, Jones was optimistic the Senate would view it favorably as well. The vote at  yesterday’s Senate Banking, Finance, and Insurance committee was 10-0.

According to Jones’ office, the bill will likely proceed to the Senate floor for a vote in early August, though it could be sooner. If Governor Schwarzenegger signs the bill into law, theoretically by Labor Day, it would take effect January 1st, 2011.

  • I’m still torn on this, but if it helps cut down on the need for people to purchase and own a private auto, I can’t see it being a bad thing.

  • Al

    I suppose that the counterargument is that it might allow people to run low-rent car rental companies using cars with lower-than-rental-rate insurance, which get into more accidents than the average car, driving costs up for everybody. I suppose it depends on whether or not car-rental companies pay significantly more in insurance per car than individuals. Or, for instance, if Mr. A is prone to accidents, he could ‘sell’ his car to Mr. B and ‘rent’ it back, piggybacking on Mr. B’s rates. But you can do that already–you just wouldn’t tell.

    On the whole I love it– some real possibilities here.

  • Al,
    The personal car-sharing option will be run through conventional car-sharing companies, covered by their very good commercial insurance. It will actually be better than personal insurance coverage.