What is Car Sharing Insurance? || Insights with Blanca Pacheco
Published Date: 08/01/2024
What Is Car Sharing Insurance? How Assemblymember Blanca Pacheco’s Bill Protects California’s Growing Mobility Market
California is home to innovation — from the tech hubs of Silicon Valley to the rideshare revolutions of Uber and Lyft. Now, a new frontier is reshaping the way people think about car ownership and transportation: peer-to-peer car sharing.
Through apps like Turo and Getaround, everyday drivers can rent out their personal vehicles to others, transforming idle cars into income-generating assets. It’s a modern twist on the sharing economy — flexible, community-driven, and efficient.
But like any new model, it comes with complex insurance questions. Who’s liable if something goes wrong? What kind of coverage is required? And how do existing laws — written long before this technology existed — keep up?
These are exactly the questions addressed in Assembly Bill 2743 (AB 2743), introduced by Assemblymember Blanca Pacheco (D–Downey). In a recent interview on Insurance Hour with host Karl Susman, Pacheco unpacked what car sharing insurance really means, why her bill matters, and how it protects both innovation and consumers.
The Basics: What Is Car Sharing Insurance?
Pacheco began by breaking down the core concept in plain terms:
“Traditionally, we all have insurance for our own vehicles,” she said. “Now, with apps like Turo, I can rent out my vehicle to someone else. But when I do that, I need an additional insurance policy through the app.”
In California, peer-to-peer car sharing is distinct from ride-sharing (like Uber or Lyft). Instead of hiring a driver, the renter becomes the driver. The platform facilitates the transaction and provides insurance coverage during the rental period.
This results in three layers of insurance coverage:
- The vehicle owner’s personal auto insurance, which covers regular use.
- The driver’s own insurance, if applicable.
- The platform’s policy, which kicks in when the car is rented out through the app.
“It’s mandatory to get insurance through the app,” Pacheco noted. “That coverage is already three times higher than a standard personal auto policy.”
This system ensures that all parties — the owner, the renter, and the public — are protected if an accident occurs.
The Problem: An Unintended Increase in 2025
While this layered system seems solid, an upcoming change in California law could upend it entirely.
“Right now, the limits are three times that of a personal vehicle,” Pacheco explained. “But what’s going to happen in 2025 is that those limits are set to increase even further — and that could cause this type of business to leave California.”
The change stems from Senate Bill 1107 (SB 1107), authored by Senator Bill Dodd. The bill, intended to protect motorists by raising minimum liability insurance levels, accidentally swept car-sharing programs into its scope.
“It was an unintended consequence,” Pacheco said. “Senator Dodd himself has said this wasn’t his intention — and he’s already voted for my bill to fix it.”
Without that fix, platforms like Turo could face liability requirements far beyond what’s reasonable or sustainable, leading to increased costs or even withdrawal from the California market.
AB 2743: A Bill to Protect the Future of Car Sharing
Pacheco’s bill, AB 2743, is designed to maintain stability while preventing runaway insurance costs.
“This bill will keep financial responsibility at three times that of a personal vehicle,” she explained. “It prevents the automatic increase scheduled for 2025.”
In other words, AB 2743 doesn’t reduce coverage — it simply preserves the current limits. That’s critical for maintaining a level playing field where both consumers and small business owners can participate in car sharing safely and affordably.
“If the law changes as planned,” Pacheco warned, “the costs would rise so dramatically that these platforms might not survive in California.”
Understanding “Financial Responsibility”
The term financial responsibility might sound like bureaucratic jargon, but in insurance, it refers to the minimum amount of coverage required by law to operate a vehicle or a related business.
In California, every driver must maintain liability coverage to pay for damages caused to others. For businesses or programs like Turo, that responsibility is multiplied — literally.
“Financial responsibility for car-sharing platforms is three times what’s required for a personal vehicle,” Pacheco said. “That’s already substantial. Raising it again would be unnecessary and unfair.”
Her bill ensures that these requirements remain reasonable and predictable, allowing platforms to continue operating without burdening consumers with excessive costs.
The Layers of Protection Explained
To illustrate how the system works, Susman walked through a real-world example during their discussion.
“So, there’s insurance for the car owner,” he said. “That’s primary. Then there’s insurance for the driver, if they have their own policy. And then there’s the platform’s coverage. People can even buy higher limits if they want — is that right?”
“Correct,” Pacheco confirmed. “And it’s mandatory to get insurance through the app. If you’re using Turo, that policy is three times higher than a regular car policy. And yes, users can buy up from there for more protection.”
Susman, ever the insurance professional, joked that his mind immediately goes to risk exposure.
“All I’m thinking about is what’s the maximum exposure?” he laughed. “How much insurance can you possibly get?”
While Pacheco couldn’t cite Turo’s exact maximum limits, the point was clear: flexibility exists within a system that already demands strong safeguards.
How a Bill Becomes Law (The “Schoolhouse Rock” Version)
For listeners curious about how a policy idea turns into state law, Susman asked Pacheco to walk through the process — step by step.
“You start out with an idea,” she explained. “Maybe it’s something you notice in your community, or maybe a constituent or organization — like Turo in this case — brings it to you. Then you work with Legislative Counsel to draft the bill language.”
Once drafted, the bill is introduced in the Assembly, assigned to committees (like Insurance or Judiciary), and debated publicly.
“If the bill is ‘keyed fiscal,’ meaning it affects the state budget, it goes through Appropriations,” Pacheco said. “Then it moves to the Assembly floor for a vote by all 80 members.”
If it passes, the bill crosses over to the Senate, where it’s reviewed by new committees — in this case, Judiciary and Insurance.
“It’s made it through both of those already,” Pacheco said proudly. “Now it’s sitting in Senate Appropriations.”
After that comes a Senate floor vote. If approved, it lands on the Governor’s desk.
“He can sign it into law or veto it,” she said. “Fingers crossed for a signature.”
A Bipartisan Effort
While California politics can be divisive, AB 2743 stands out as an example of bipartisan cooperation.
“Senator Dodd has already voted for my bill in committee,” Pacheco said. “He recognized that this was an unintended consequence of his own legislation, and he’s been supportive of correcting it.”
This kind of pragmatic problem-solving — legislators from different chambers and backgrounds working together — is rare but refreshing.
“It’s nice to see lawmakers fixing issues before they become crises,” Susman remarked.
Why It Matters to Everyday Californians
It’s easy to view insurance bills as niche or technical, but this one has real-world impact.
If AB 2743 fails and the 2025 changes take effect, car-sharing companies may scale back or leave California, removing an affordable transportation option for many residents — especially those who can’t afford full-time car ownership.
“We’re trying to prevent that outcome,” Pacheco said. “We want these businesses to stay here in California.”
The ripple effects would also hit the thousands of car owners who earn extra income by renting out their vehicles.
“This is about protecting small business owners, consumers, and the state’s innovation economy,” she said.
Behind the Scenes: Building Support
When Susman asked what kind of feedback she’d received from colleagues, Pacheco described an encouraging response.
“Most people understand that this is a fix — not a rollback,” she said. “We’re not trying to weaken safety standards. We’re just maintaining balance.”
By framing the issue around fairness and practicality, Pacheco has gained support across party lines and from industry groups that value both regulation and innovation.
The Broader Conversation: Regulation in the Age of Innovation
Susman noted that this issue reflects a larger pattern — where laws written decades ago can’t easily adapt to modern technology.
“Every time we have a new model — Uber, Airbnb, car sharing — the law is always playing catch-up,” he said.
Pacheco agreed, emphasizing that good policy doesn’t fight change; it manages it.
“We have to make sure our laws reflect how people actually live today,” she said. “That’s what AB 2743 is about — modernizing the system so it works for everyone.”
Looking Ahead: What Comes Next
At the time of the interview, AB 2743 had cleared major hurdles and was awaiting review in Senate Appropriations. From there, it would move to the Senate floor and — if passed — to the Governor’s desk.
“We’re almost there,” Pacheco said confidently. “And I’m hopeful it will be signed into law.”
Her optimism is well-founded. With bipartisan backing, support from industry leaders, and growing consumer awareness, the bill seems poised for success.
Final Thoughts: Balancing Innovation and Protection
The conversation closed with a reflection on what makes this issue so important — not just for car sharing, but for California’s broader role as a global innovation leader.
“We have to protect innovation without making it impossible to do business here,” Pacheco said. “It’s about balance — between safety, responsibility, and opportunity.”
Susman agreed, noting that this is the kind of common-sense policymaking Californians want to see more of.
“You’re fixing a problem before it becomes a bigger one,” he said. “That’s what leadership looks like.”
Key Takeaways
- Car-sharing insurance provides layered coverage for owners, renters, and platforms — ensuring protection for all parties.
- AB 2743 prevents an unintended increase in 2025 insurance limits that could threaten California’s car-sharing market.
- The bill maintains existing safety standards while promoting affordability and innovation.
- Bipartisan cooperation between Assemblymember Pacheco and Senator Dodd highlights effective, solutions-oriented governance.
- The legislation ensures California remains a hub for both technological progress and consumer protection.
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