California Assembly Passes Personal Car-Sharing Insurance Bill

Photo: Scott Beale/Laughing Squid

The California Assembly voted unanimously yesterday to support AB 1871, a bill that would allow car owners to share their personal vehicles in coordination with car-sharing services without voiding their personal auto insurance. The bill opens the door to redefining car ownership, leading to economic, environmental and traffic congestion improvements, according to its sponsors.

"What's exciting about this bill is it will facilitate more car sharing," said Assemblymember Dave Jones (D-Sacramento). Jones said personal car sharing reduces the need to own a car in the first place, lowers the cost of owning the car that you've already purchased and reduces overall traffic and parking problems. "This will allow us to take car-sharing to the next level."

Several services, such as Divvy Car and Relay Rides, already help individual car owners share their vehicles, though current California insurance laws permit insurers to void personal car insurance policies if owners receive compensation for the service. Unless drivers obtain a livery or commercial license, getting money for a ride has to be as informal as sharing gas expenses among a carpool. Other programs for helping seniors who are too old to drive, like the Independent Transportation Network and Neighbor Ride, rely on the goodwill of volunteers and charitable organizations.

If AB 1871 becomes law in California, drivers will be able to offer their own vehicles through car-sharing companies to a network of their choosing. Because cars are unused on average more than 90 percent of the time, owners could get money for an asset that is otherwise unused and depreciating.

"Usually the cost of owning a car is $400-800 a month, assuming it's a reasonably nice car," said Sunil Paul, CEO of car-share start-up Spride Share and a supporter of the bill. "If you earn a couple hundred bucks a month, that goes a long way toward covering your expenses."

As for those people who can't imagine sharing their vehicle with strangers, either because of trust issues or because their vehicle is an extension of their personality?

"If you think your car is your baby, then don't use this service. We
don't need everyone to do it," said Paul. He also noted the bill would require personal car-sharing to be part of commercial car-sharing services, which would still be required to hold large commercial insurance policies, thus mitigating individual risk from collisions or bad driving. And personal car-share participants would still be screened through departments of motor vehicles as they are currently.

"Not everyone thinks their
car is their baby," said Paul.

Assemblymember Jones also pointed to the convenience afforded by technological advances and the popularity of social networking as solutions to the trust issue.

"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," said Jones.

The overwhelming, 63-0 bi-partisan vote for the bill in the Assembly bodes well for its prospects in the Senate, said Jones. Because the bill encourages entrepreneurial spirit, he added, Republicans in the Assembly embraced it. He didn't see a reason the Senate wouldn't feel the same way.

The bill will likely be assigned to a Senate policy committee in the next few weeks and then to the Senate floor by late June or early July. In addition to support from the insurance industry and car-share companies, AB 1871 received support from the Environmental Defense Fund, Sierra Club of California, American
Planning Association of California and Community Action to Fight Asthma.

Jones was optimistic the bill would reach Governor Arnold Schwarzenegger's desk by late August, if not sooner.

"I'm hopeful the governor will see the tremendous benefit of removing this insurance obstacle to personal car sharing," said Jones.