US: California plays hide-and-seek with regulation affecting car-sharing services image

The state of California decided to revoke a notice issued on January 5 that cited an 80-year old law that mandated private drivers operating for car-sharing service providers such as Uber and Lyft to wear commercial license plates.

The California Department of Motor Vehicles said that such companies that don’t comply to the regulation might get a citation after releasing a notice at the start of the month that quoted a 1935 law. Now, the director of the DMV in Sacramento, Jean Shiomoto, said the agency was axing the alert due to the fact that uncertainty hovers over the way the law should be interpreted in today’s regulatory context that also includes ride-share operators. If the regulation in the 1935 law was carried on, drivers needing to secure commercial auto insurances would have most likely bumped the price of the service. Lawsuits and regulatory hurdles have been steadily increasing in the last months against Uber, Lyft and other ride-share companies as they seek a piece of the US taxi and limousine market, estimated to be worth north of $11 billion by IbisWorld Research.

Today, Uber – a Silicon Valley startup that was established back in 2009 – is worth over $40 billion – the most highly valued US technology startup and one above even established global automakers. When it comes to the issue of insurance covering the ride-sharing industry ride-sharing industry, which might have been affected by the 1935 law, California state lawmakers in 2014 passed a bill that introduced a “hybrid” insurance: car-booking service would need to provide more than $200,000 of insurance for each driver on duty and $1 million when a customer is picked up if they want to legally operate in the state.

Via Bloomberg