California Gov. Jerry Brown signed new insurance requirements on ridesharing companies into law on Wednesday, but the regulations come at a far lower cost to the industry than previously written into the bill, officials said.
Companies such as Lyft, Sidecar and UberX, which is a part of black-car service Uber, allow passengers to summon paid rides using apps on their smartphones and have gained in popularity in dozens of U.S. cities over the past few years.
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But they face opposition from taxi companies that argue the upstarts do not face the same stringent regulations as do traditional cabs, and insurance companies want ridesharing drivers to carry more expensive insurance policies.
The law requires ridesharing companies' insurance to cover drivers from the moment they turn on their app, not just from when they accept a ride on their app, according to information from the office of California Assemblywoman Susan Bonilla, who championed the bill.
Drivers under the new law must maintain primary liability insurance coverage of at least $50,000 per person and $100,000 per occurrence for death and personal injury during the time they log on to the application, as well as $30,000 for property damage, her office said.
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The insurance can be paid by the driver or the rideshare company.
An earlier version of the bill required $750,000 worth of insurance coverage in that window, down from $1 million in the previous draft, it said.
The move to dictate more extensive coverage stems from a New Year's Eve incident in San Francisco when an UberX driver killed a child while his app was on, but before he had accepted a ride.
"We have agreed to a compromise that provides clarity for the ridesharing community in California," Lyft spokeswoman Chelsea Wilson said in a statement.
Uber spokeswoman Eva Behrend said: "We are our proud that our governor has recognized that Californians love Uber."
The companies, which initially opposed stricter requirements, ultimately supported the final bill after Bonilla agreed to lower the amount of insurance required when drivers do not have passengers in their vehicles, Bonilla's office said in a statement.
The driver must also maintain $1 million for personal injury and property damage from the time a ride request is accepted until the passenger exits the vehicle, her office said.
Brown announced on Wednesday he had signed the bill into law and its provisions will take effect next summer.