SENATE BILL REPORT

SB 6426

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Reported by Senate Committee On:

Financial Institutions, Housing & Insurance, February 1, 2012

Title: An act relating to personal vehicle sharing programs.

Brief Description: Regulating personal vehicle sharing programs.

Sponsors: Senators Prentice, Benton, Hobbs, Haugen, Keiser, Fain and Shin.

Brief History:

Committee Activity: Financial Institutions, Housing & Insurance: 1/25/12, 1/31/12, 2/01/12 [DPS].

SENATE COMMITTEE ON FINANCIAL INSTITUTIONS, HOUSING & INSURANCE

Majority Report: That Substitute Senate Bill No. 6426 be substituted therefor, and the substitute bill do pass.

Signed by Senators Hobbs, Chair; Prentice, Vice Chair; Benton, Ranking Minority Member; Fain, Haugen and Keiser.

Staff: Edward Redmond (786-7471)

Background: Every person in this state who operates a private passenger motor vehicle must be insured under an insurance liability policy, a liability bond, or a certificate of deposit or they must be self-insured. The minimum amounts of liability coverage required by the financial responsibility statutes are:

There are mandatory offerings of personal injury protection coverage and underinsured automobile coverage. There are a number of other types of coverage that may be offered by an automobile insurer. Insurers may offer any type of coverage in any amount that is filed with and approved by the Insurance Commissioner (Commissioner). Automobile insurance rates and forms are filed with the Commissioner and must be approved by the Commissioner prior to use by an insurer. If the Commissioner determines that filed rates are not excessive, inadequate, or unfairly discriminatory, then the Commissioner must approve them.

Automobile rates may be adjusted for any factor that is not prohibited by law. Rates are often adjusted according to factors including the driver's age; sex; marital status; miles driven; claims history; geographical area; credit history; and the make, model, and year of a vehicle.

An insurer may cancel, non-renew, or refuse to insure an insurance policy for any reason that is not prohibited by law.

Summary of Bill (Recommended Substitute): Definitions. An owner's insurance policy is an automobile liability insurance policy that includes all coverage necessary to comply with statutory requirements and any optional coverage selected by the registered owner, including personal injury protection coverage, underinsured coverage, comprehensive property damage coverage, and collision property damage.

Personal vehicle sharing is the use of a private passenger motor vehicle by persons other than the vehicle's registered owner in connection with a personal vehicle sharing program.

Personal vehicle sharing program (program) is a legal entity qualified to do business in this state that facilitates the sharing of private passenger motor vehicles for noncommercial use by individuals within this state.

Insurance Requirements. For each vehicle used in personal vehicle sharing, a program must provide insurance coverage for the vehicle and all persons who, with the consent of the program, use the motor vehicle. The limits for coverage must be not less than three times the minimum statutorily-required limits. A program may not provide collision or comprehensive coverage that is less than the actual cash value of the vehicle. The owner must be given the option to buy underinsured motorist coverage and personal injury protection coverage.

Personal Vehicle Sharing Program Requirements. A program must:

Recordkeeping. A program must collect and maintain records:

These records must be made available to the vehicle's registered owner, the vehicle's registered owner's primary automobile liability insurer, and any government agency as required by law.

Liability. Notwithstanding an owner's insurance policy or the financial responsibility laws, a program assumes all liability of the vehicle owner for any loss or injury that occurs when the vehicle is under a program and is considered the vehicle owner for all purposes.

The provisions of the bill do not limit:

A program continues to be liable until:

A program must assume liability for a claim in which a dispute exists as to who was in control of a private passenger motor vehicle when the loss giving rise to the claim occurred.

If a vehicle's registered owner was in control of the vehicle at the time of the loss, the insurer of the vehicle must indemnify the program to the extent of the insurer's obligation under the owner's insurance policy.

If a private passenger motor vehicle's registered owner is named as a defendant in a civil action for any loss or injury that occurs at any time when the vehicle is under the operation or control of a person, other than the vehicle's registered owner, pursuant to a program, or is otherwise under the control of a program, the program has the duty to defend and indemnify the vehicle's registered owner.

Notwithstanding any provision in the owner's insurance policy, while the vehicle is under the operation or control of a person, other than the vehicle's registered owner, under a program, or is otherwise under the control of a program:

Provisions Impacting the Owner and the Owner's Insurer. An owner's insurance policy may not be canceled, rescinded, or non-renewed solely because an owner's vehicle has been in a program.

A private passenger motor vehicle may not be classified by an insurer as a commercial or a for-hire motor vehicle solely because the vehicle's registered owner allows the vehicle to be used for personal vehicle sharing if:

The provisions of the bill apply to automobile liability insurance policies issued or renewed on or after January 1, 2013.

EFFECT OF CHANGES MADE BY FINANCIAL INSTITUTIONS, HOUSING & INSURANCE COMMITTEE (Recommended Substitute):

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony on Original Bill: PRO: This is a relatively new idea. The stakeholders have met in a series of long meetings and the positions are getting closer. Peer-to-peer used to mean borrowing something from a neighbor. The Internet has changed how we do business. This bill provides certainty in the marketplace for insurance companies, brings businesses into the state, helps the environment, reduces the pressure for more transportation investments, and puts money into people's pockets. There are numerous transportation, land use, environmental, and social benefits that will result from this type of system. Similar legislation has passed in Oregon and California. There is an opportunity to lessen emissions and reduce fuel costs. Most cars are only used an hour a day. These types of systems seem to reduce miles driven. All of society is helped when people have more choices and more efficient use of resources. This may result in an incremental improvement for the environment. The business model is essentially a marketplace that matches screened drivers with cars. The companies take a commission for the match. There are all types of cars in the system. Car sharing can take place anywhere in the state. There are still a few issues to be worked out in the bill. Vehicle sharing helps show a per-mile cost to obtain and use a vehicle. It provides an incentive to reduce the use of a vehicle. There are a few issues outstanding that will be worked upon.

OTHER: Insurers have had several very productive meetings with the sponsor and other stakeholders to work on this issue. Many concerns have already been resolved. Some concerns remain. Most are based on the relationship between the owner's insurer, the program, and the renter. A lawyer for an injured party must seek the best opportunity to make their client whole. While the purpose of the bill is to move liability from the owner's insurer to the program is appreciated, there are still some details to work out to make sure that there is no dispute about who is liable for a loss. Insurers will continue to work with other stakeholders and are optimistic that all concerns will be resolved.

Persons Testifying: PRO: Carrie Dolwick, Transportation Choices Coalition; Drew Bouton, Office of Insurance Commissioner; John Atcheson, Get Around.

OTHER: Mel Sorensen, Property Casualty Insurers Assn. of America.