Reforming Insurance in California, and the Future of Rideshare in the State

With the signing of SB 371, California took a major step toward making rideshare more affordable by lowering excessive government-mandated insurance costs for rideshare drivers while preserving the strong protections riders and drivers rely on.

The successful passing of SB 371 is part of a landmark compromise that was reached between Governor Newsom, legislative leaders, rideshare companies, and SEIU California earlier this month. The insurance reforms and consumer savings of SB 371 are tied to another bill, AB 1340, which was passed by the legislature and is expected to be signed into law in the coming weeks.

How SB 371 Makes Rideshare More Affordable

SB 371 directly addresses one of the biggest hidden costs impacting rideshare passengers and drivers in California: outdated insurance rules.

California riders have been paying some of the highest costs in the country. more than they should . Statewide, around a third of every rider fare goes straight to government-mandated insurance costs; in Los Angeles County, it's nearly half*. A major contributor to these high costs was an excessive $1 million Uninsured/Underinsured Motorist (UM/UIM)insurance requirement that applied only to rideshare-not to taxis, buses, or personal cars.

Although the UM/UIM policy only kicks in when another driver (not the rideshare driver) is at fault for an accident, it's been a major factor in why riders in California pay more than three timesthe insurance costs compared to most other places in the country.

That burden falls on both sides: higher fares for riders, fewer trips and less opportunity to earn for drivers.

This unnecessarily high insurance requirement also enabled a network of ambulance-chasing personal injury lawyers in search of big payouts to turn minor accidents into million-dollar lawsuits-further driving up costs for everyone.

SB 371 helps fix the problem by bringing rideshare's UM/UIM insurance requirements closer to those of every other vehicle on the road, while still holding us to some of the highest coverage standards and keeping core insurance protections in place.

Starting January 1, 2026,every Uber passenger trip in CA will be covered by:

• UM/UIM Coverage ($60,000 per individual and $300,000 per accident)
  • No other passenger vehicle in the state is required to carry anyUM/UIM coverage.
• $1 million in liability insurance to cover injuries or property damage in accidents caused by the rideshare driver.
• $1 million in occupational accident coverage-provided by Prop 22-that helps drivers with medical bills if they're injured while driving, no matter who is at fault.
• Insurance that covers the cost to repair the rideshare driver's car regardless of who is at fault for the damage. (This insurance is maintained by Uber despite no legal obligation to do so.)**

What AB 1340 Means for Rideshare Drivers

AB 1340 will give rideshare drivers the option to organize around pay and benefits without sacrificing the independence and flexibility that is guaranteed to them under Prop 22. This bill does not mandate a union; however, it gives drivers a legal option they haven't had before to organize if they choose to.

Under the framework created by AB 1340, drivers will be able to opt into sectoral bargaining and elect a union to represent them and negotiate on their behalf-all without giving up control over when, where, or how they work.

Prop 22-which was backed by nearly 10 million California voters and upheld by the state's Supreme Court-remains the law of the land.

Together, these new laws represent a compromise that lowers costs for riders while creating stronger voices for drivers-demonstrating how industry, labor, and lawmakers can work together to deliver real solutions.

*As of August 1, 2025

**Subject to a $ 2,500 deductible, and contingent on the driver maintaining comprehensive and collision coverage on his/her personal auto policy.

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Frequently Asked Questions (FAQ)

1. Does this agreement change driver classification?

No. AB 1340 cannot, and does not alter the independence that you have to choose when, where, how long, and for which companies to drive, or whether to drive at all. A driver representative organization, if one is elected, is not allowed to bargain any terms that limit the flexibility you are guaranteed by Prop 22.

1. Are drivers now required to endorse a driver organization?

No. AB 1340 allows any driver to sign an authorization card that says they want that organization to represent them. If that organization submits enough authorization cards to the state, they may be certified as the exclusive bargaining representative for all drivers in the state. You can sign a card or not, and if the organization is certified, they will represent you even if you didn't sign a card. Uber expresses no views, and it is entirely your choice.

1. What's in it for me if I don't want to join any group?

Whether you want to be represented or not is your choice. We believe that passing SB 371 to lower insurance costs will result in lower fares to riders, and a greater portion of the fare going to drivers. That will be true whether or not a driver representative organization is elected.

1. Is there any cost to drivers and delivery people for representation? Who is paying their dues?

Under the AB 1340, if an organization is elected to represent drivers, any dues paid to that organization are paid on a voluntary basis. A driver may, but is not required to, opt to pay dues. You will not need to pay dues in order to be a member of the union, and the union would represent you even if you choose not to pay dues.

1. How will drivers be educated about their new rights and protections?

Under AB 1340, if a driver organization is elected, all new and existing drivers will receive notice that they are represented, and that notice will have a summary of their rights. Additional details are left to future discussions with the state, the representative, and the companies like Uber that are covered.

1. What protections are in place to prevent retaliation against organizing drivers?

It is already illegal under Federal lawfor any business to discriminate on the basis of union membership. AB 1340 makes it unlawful for any Transportation Network Company (TNC) to retaliate against a driver for exercising their right to elect a bargaining representative. Uber expresses no views, and it is entirely your choice whether or not to submit an authorization card or participate in any organizing activities.

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