Small Business Trends has reported that California has enacted SB 371, which will reduce uninsured/underinsured motorist (UM/UIM) insurance requirements for rideshare drivers starting January 1, 2026. Additionally, AB 1340 has been introduced to allow driver organizing. These legislative moves are expected to lower insurance costs and fares in Los Angeles.
According to Small Business Trends’ post on X, SB 371 aims to address the rising automobile insurance costs affecting rideshare fare levels, particularly in high-cost metro areas like Los Angeles. The law will reduce the required UM/UIM coverage from a higher threshold to $60,000 per individual and $300,000 per accident beginning January 1, 2026. By aligning these thresholds with those applied to standard private-vehicle operators, rideshare companies and drivers anticipate lower insurance premiums that could lead to reduced fares and increased consumer spending.
The Sacramento Governor’s Office release states that SB 371 will decrease UM/UIM coverage obligations for transportation network companies (TNCs) and their drivers from the previous $1 million minimum down to $60,000 per person and $300,000 per incident. The reform is expected to lower cost burdens for drivers and pass savings onto riders, especially in areas like Los Angeles where insurance costs significantly affect trip pricing. Additionally, the bill requires the California Public Utilities Commission and California Department of Insurance to report on accident data and fare impacts by 2027.
CalMatters reports that AB 1340 will grant California rideshare drivers the statutory right to form and join driver organizations, engage in collective bargaining on pay and benefits while maintaining independent contractor status, and establish mediation/arbitration procedures with TNCs. The bill is considered a potential model for gig-economy reforms nationwide. Small businesses relying on affordable rideshare services are monitoring its implications for operational costs and service access. While insurance cost savings from SB 371 are anticipated by small-business owners in Los Angeles as potential reductions in delivery and rideshare expenses, there is caution that increased driver compensation under AB 1340 could offset these gains.
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