In September 2025, California Governor Gavin Newsom signed SB 371 into law, fundamentally altering the insurance landscape for rideshare accidents in the state. This educational overview examines what the legislation contains, the context surrounding its passage, and the various perspectives on its potential impact.
Educational Disclaimer: This article provides general educational information about California legislation and is not legal advice. The interpretation and application of laws varies by circumstance. Anyone with questions about how this legislation may affect their specific situation is encouraged to consult with a licensed attorney.
What SB 371 Changed
Prior to SB 371, California required rideshare companies like Uber and Lyft to maintain $1 million in uninsured/underinsured motorist (UM/UIM) coverage for passengers during active rides. This coverage applied when passengers were injured by drivers who either had no insurance or insufficient insurance to cover the damages.
SB 371 reduced this mandatory UM/UIM coverage from $1 million to:
- $60,000 per person for bodily injury or death
- $300,000 per incident for total bodily injury or death claims
This represents a reduction of approximately 94% in per-person coverage limits.
The Legislative Context
SB 371's passage occurred against a backdrop of several concurrent developments:
Rideshare Company Advocacy: Uber and Lyft actively lobbied for reduced insurance requirements, citing rising insurance costs that they attributed to fraudulent claims. The companies argued that high insurance costs were being passed on to consumers through increased fares and threatened the viability of rideshare services in California.
The RICO Litigation: In July 2025, Uber filed federal RICO lawsuits against multiple personal injury law firms and medical providers, alleging a coordinated scheme to file fraudulent claims. These lawsuits generated significant media coverage and framed the insurance cost issue as a fraud problem rather than a coverage adequacy question.
Rising Fare Concerns: Data indicated that California rideshare fares had increased significantly, with some analyses attributing approximately 32% of fare costs to insurance expenses. Legislators faced pressure to address consumer affordability concerns.
Arguments Supporting the Legislation
Proponents of SB 371 advanced several arguments:
Fraud Reduction: Supporters argued that high coverage limits created incentives for fraudulent claims and that reducing limits would decrease fraud by making staged accidents less financially attractive.
Consumer Affordability: The legislation was framed as necessary to keep rideshare services affordable for California consumers, particularly in areas with limited public transportation options.
Market Sustainability: Rideshare companies suggested that without reduced insurance requirements, they might need to limit or withdraw services from certain California markets.
Alignment with Other States: Proponents noted that the new limits more closely aligned California with coverage requirements in other states.
Arguments Against the Legislation
Critics of SB 371 raised several concerns:
Inadequate Coverage: Consumer advocates argued that $60,000 is insufficient to cover serious injuries. Medical costs for significant trauma, spinal injuries, or traumatic brain injuries routinely exceed this amount, potentially leaving injured passengers responsible for substantial medical debt.
Timing Concerns: Some observers noted that the legislation passed before the RICO allegations had been tested in court, meaning coverage was reduced based on fraud claims that remained unproven.
Corporate Cost-Shifting: Critics argued the legislation effectively shifted accident costs from rideshare companies to injured individuals, taxpayers (through programs like Medi-Cal), and health insurers.
Access to Justice: Personal injury attorneys noted that reduced coverage limits may make it economically unfeasible to represent seriously injured rideshare passengers, as the available recovery may not justify the costs of complex medical litigation.
Potential Implications for Injured Passengers
The reduced coverage limits create several potential scenarios for rideshare passengers injured by uninsured or underinsured drivers:
Coverage Gaps: Passengers with injuries exceeding $60,000 in medical costs may need to rely on their own health insurance, personal UM/UIM coverage (if they have it), or other sources to cover the difference.
Health Insurance Subrogation: When health insurance covers accident-related medical costs, insurers typically have subrogation rights to recover from any settlement. With reduced rideshare coverage, there may be less available to satisfy both subrogation claims and compensate the injured person.
Medical Provider Considerations: Providers who treat patients on medical liens may face increased uncertainty about payment when coverage limits are reduced, potentially affecting willingness to provide lien-based treatment.
The Broader Policy Debate
SB 371 reflects broader policy tensions in the gig economy:
Corporate Responsibility vs. Consumer Costs: The debate centers on who should bear the costs of accidents-rideshare companies, passengers, or society broadly through healthcare systems and safety net programs.
Fraud vs. Legitimate Claims: While fraud in any system merits attention, observers disagree about the prevalence of fraud and whether reducing coverage for all claimants is an appropriate response to fraudulent conduct by some.
Regulatory Approach: Some argue that targeted fraud enforcement would address bad actors without reducing protections for legitimately injured passengers, while others contend that systemic changes like coverage reductions are necessary.
What Rideshare Passengers May Consider
Given the changed insurance landscape, some general considerations that individuals sometimes evaluate include:
Personal Insurance Review: Some individuals choose to review their own auto insurance policies to understand what UM/UIM coverage they carry personally, which may provide additional protection in some circumstances.
Health Insurance Understanding: Understanding one's health insurance coverage and how it coordinates with other potential sources of payment is information some find useful.
General Awareness: Being aware of the insurance framework that applies to rideshare services is information that some consumers find relevant to their transportation choices.
Anyone with specific questions about insurance coverage or legal rights is encouraged to consult with licensed insurance professionals or attorneys who can provide guidance based on individual circumstances.
Looking Forward
The long-term effects of SB 371 remain to be seen. Observers have noted several areas to watch:
- Whether rideshare fares decrease as projected by proponents
- How the RICO litigation resolves and what it reveals about fraud prevalence
- Whether coverage gaps lead to increased reliance on public health programs
- Whether other states follow California's approach or maintain higher coverage requirements
- Whether future legislative efforts attempt to modify or reverse the coverage reductions
This legislation represents a significant shift in how California balances corporate costs, consumer protection, and access to compensation for injured individuals in the rideshare context.
