Rideshare Insurance Limits Cut: What Rideshare Users Need to Know

In 2025 California passed two linked rideshare laws: SB 371, which lowered the uninsured/underinsured motorist coverage rideshare companies must carry for passengers starting January 1, 2026, and AB 1340, which gives rideshare drivers a way to organize and bargain collectively. SB 371 took effect only because AB 1340 was also enacted. These changes carry significant implications for people who rely on rideshare services for transportation or delivery operations.

Table Of Contents

• SB 371: Reducing Rideshare Insurance Costs

• Legal Considerations

  • Conclusion

SB 371: Reducing Rideshare Insurance Costs

Supporters of SB 371, including Uber, said the old requirements drove up rideshare insurance costs. Before the change, Uber said California riders paid some of the highest fares in the U.S., with roughly one-third of every fare allocated to mandated insurance, and that in Los Angeles County this could approach 50% of the total fare. The previous law required a $1 million Uninsured/Underinsured Motorist (UM/UIM) policy, which personal auto policies were not required to carry.

“Curbing these excessive insurance requirements is a game-changer. They artificially inflate fares and limit drivers’ earning potential,” said an Uber spokesperson.

The old insurance requirements also contributed to escalated liability risks. Minor collisions frequently led to costly lawsuits affecting both riders and drivers.

Since January 1, 2026, the UM/UIM coverage rideshare companies must provide is $60,000 per person and $300,000 per incident, and it applies only while a passenger is in the vehicle. The $1 million liability coverage requirement from ride acceptance to the end of the ride did not change. SB 371 does not address occupational accident coverage. That comes from Proposition 22 (Business and Professions Code section 7455), which requires it while app-based drivers are online, with at least $1 million for medical expenses.

Legal Considerations

• Liability Exposure: SB 371 lowered the UM/UIM coverage available to injured passengers from $1 million to $60,000 per person and $300,000 per incident, so other sources of recovery matter more than they did before 2026.

• Occupational Coverage: Separately from SB 371, Proposition 22 requires occupational accident insurance for app-based drivers while they are online (Business and Professions Code section 7455).

• Collective Bargaining Effects: AB 1340 introduces potential negotiation of driver compensation, which businesses should monitor, as it could indirectly affect service pricing and availability.

Conclusion

California’s SB 371 and AB 1340 highlight a collaborative effort between lawmakers, industry stakeholders, and labor organizations to balance affordability, driver protections, and legal liability. By adjusting rideshare insurance requirements and empowering drivers to organize, these reforms set a precedent that could influence nationwide rideshare regulations, offering opportunities and considerations for small businesses across the state.

Stay informed and protect your rights: learn how California’s new rideshare insurance limits affect drivers and passengers. Contact Uber Lawyer today for a free consultation.