Report - 2022 02 24 A29905 D244799 Bill Report 1389 S Sbr Bfst Ta 22

Summary

A Senate Bill Report on SHB 1389, as of February 22, 2022, prepared for the Senate Committee on Business, Financial Services & Trade, on a bill originally sponsored by Representatives Corry and Eslick that passed the House 96-2. It describes current Washington law on insurance minimums and personal vehicle sharing programs, and notes that NCOIL adopted a peer-to-peer car sharing model act that 19 states have adopted. The bill would replace personal vehicle sharing requirements with a peer-to-peer car sharing program chapter covering insurance, disclosures, record-keeping for three years and safety recalls, and would reduce required liability coverage to the state minimum. The report gives an effective date of January 1, 2023 and summarizes pro, con and other public testimony, including concerns from the Office of the Insurance Commissioner.

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                            SENATE BILL REPORT
                                 SHB 1389

                                     As of February 22, 2022

Title: An act relating to transportation.

Brief Description: Concerning transportation.

Sponsors: House Committee on Consumer Protection & Business (originally sponsored by
    Representatives Corry and Eslick).

Brief History: Passed House: 2/12/22, 96-2.
     Committee Activity: Transportation: 2/17/22 [w/oRec-BFST].
     Business, Financial Services & Trade: 2/22/22.


                                     Brief Summary of Bill
           • Replaces vehicle sharing program requirements with a new peer-to-peer
             car sharing programs chapter based on model language used in other
             states.
           • Outlines record keeping and disclosure requirements for the peer-to-peer
             car sharing program and vehicle owner.
           • Reduces the the required limits for liability coverage from three times
             the minimum statutorily required limits to the minimum statutorily
             required limit.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Clinton McCarthy (786-7319)

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




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

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         • $10,000 in coverage for damage to another's property;
         • $25,000 in coverage for injuries to any one other person; and
         • $50,000 in aggregate coverage for injuries to all other persons involved.

     Automobile insurers must offer personal injury protection coverage and underinsured
     automobile coverage. Insurers also 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.

     Personal Vehicle Sharing. Since 2012 Washington has regulated car sharing businesses. A
     personal vehicle sharing program is a business that facilitates sharing private passenger
     motor vehicles for noncommercial use by individuals within this state. Personal vehicle
     sharing program regulations include insurance requirements, legal requirements, liability,
     disclosures, and record-keeping.

     When a vehicle is in a personal vehicle sharing program, liability may be transferred from
     an automobile insurer to the personal vehicle sharing program. For each vehicle used in
     personal vehicle sharing, a personal vehicle sharing program must provide insurance
     coverage for the vehicle and all persons who, with the consent of the program, use the
     motor vehicle. A personal vehicle sharing 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.

     National Council of Insurance Legislators. The National Council of Insurance Legislators
     (NCOIL) is a legislative organization comprised principally of legislators serving on state
     insurance and financial institutions committees around the country. NCOIL writes model
     laws in insurance. In February 2020, NCOIL adopted its peer-to-peer car sharing program
     model act. As of February 2022, 19 states have adopted the model legislation.

     Summary of Bill: Peer-to-Peer Car Sharing Program. Requirements for peer-to-peer car
     sharing programs are established, including insurance, disclosures, and record-keeping,
     replacing requirements for personal vehicle sharing programs, which are repealed.

     Definitions. A peer-to-peer car sharing program (program) is a business platform that
     connects vehicle owners with drivers to enable the sharing of vehicles for financial
     consideration.

     A car sharing period (sharing period) is the period of time during which a shared vehicle is
     being delivered to a driver or that commences with a vehicle start time and, in either case,
     ends at a car sharing termination time.


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     A car sharing program agreement (program agreement) is the terms and conditions
     applicable to a shared vehicle owner and a shared vehicle driver during the sharing period.

     A shared vehicle (vehicle) is a vehicle available through a program.

     Insurance. A program must ensure that, during each sharing period, the shared vehicle
     owner and the shared vehicle driver are insured under a motor vehicle liability insurance
     policy that provides insurance coverage in amounts not less than the required state
     minimum amounts. The insurance may be satisfied by motor vehicle liability insurance
     maintained by one, or any combination, of a shared vehicle owner, a shared vehicle driver,
     or a peer-to-peer vehicle sharing program, and such satisfying insurance must be primary
     during each car sharing period.

     The program is not liable when an owner makes a material, intentional, or fraudulent
     misrepresentation, or material, intentional, or fraudulent omission, to the program before the
     sharing period in which the loss occurred or when an owner acts in concert with the driver
     who fails to return the vehicle pursuant to the terms of the program agreement.

     The program must assume primary liability for a claim when it is in whole or in part
     providing the insurance required, if a dispute exists regarding who was in control of the
     vehicle at the time of the loss and the program does not have required records maintained.
     If insurance maintained by the owner or driver has lapsed or does not provide the required
     coverage, the program's insurance must provide the coverage required beginning with the
     first dollar of a claim and shall have the duty to defend such claim.

     The program will be indemnified by the owner's personal policy of motor vehicle liability
     insurance if it is determined that the owner was in control of the vehicle at the time of the
     loss. The program is not limited in seeking indemnification from an owner or driver for
     economic loss sustained by the program resulting from a breach of the terms and conditions
     of a program agreement.

     An insurer that writes motor vehicle liability insurance in this state may exclude coverage
     and the duty to defend or indemnify for any claim afforded under an owner's motor vehicle
     liability insurance policy.

     The program may own and maintain as the named insured one or more insurance policies
     that provide coverage for liabilities of the program, vehicle owner, or driver and any
     damages or losses to a vehicle.

     Disclosure Requirements. The program's agreement must include disclosures related to:
        • insurance, including liability and indemnification;
        • financial responsibility;
        • rates and fees;


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         • emergency contact information for roadside assistance and inquiries; and
         • notice that insurance may end when the sharing period has ended.

     Notices and Record-Keeping. Prior to making a vehicle available through the program, the
     program must notify the owner that participation may violate the terms of the owner's
     contract with a lienholder, if any.

     The program is required to keep records related to a vehicle, owner, and driver for three
     years. The program must provide records to the owner or owner's insurer to facilitate any
     claims processing.

     Additional Conditions. The program is responsible for any equipment, such as a global
     positioning system or other special equipment, that is put in or on a vehicle to monitor or
     facilitate sharing and must agree to indemnify and hold harmless an owner for any damage
     to or theft of such system or equipment during the sharing period not caused by an owner.
     The program has the right to seek indemnity from a driver for any loss or damage to such
     system or equipment that occurs during the sharing period.

     If the shared vehicle owner has received an actual notice of a safety recall on the vehicle, a
     shared vehicle owner may not make a vehicle available in a program until the safety recall
     repair has been made.

     The program may not enter into an agreement with a driver unless the driver holds a driver
     license authorizing the driver to operate vehicles of the class of the vehicle the driver will be
     using through the program.

     Appropriation: None.

     Fiscal Note: Not requested.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill takes effect on January 1, 2023.

     Staff Summary of Public Testimony: PRO: The bill is focused on liability insurance
     between a program and a vehicle owner. This language has been tailored to Washington
     State. The language is clear and fine where it is at. Now is the time to continue to lead in
     this space with the passage of this bill. This will clarify the obligations to all parties
     involved. This ensures that there are not gaps in insurance for drivers at any time. It will
     prevent cars from being used that are subject to a safety recall. This bill has been worked
     extensively in the House. This modernizes consumer protections, and the bill passed with
     bipartisan support. Peer to peer car sharing allows people to optimize one of their largest
     assets to provide a source of income. This modernizes the statute that was passed ten years
     ago. This bill provides greater protections for consumers. Various technology groups,


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     insurers, and peer to peer car rental companies support this bill. Insurance is clarified by
     strengthening the regulatory infrastructure. Airports have the authority to impose rules and
     regulations. The Office of the Insurance Commissioner (OIC) amendments would revert to
     current law. The bill clarifies that this is not the business of car rental. This doesn't provide
     an avenue for commercial use. There is a three party platform. The owner and the platform
     are two different people. A car sharing program does not own the fleet.

     CON: Because Washington has an existing statute to govern this issue, this bill isn't
     necessary. Because Washington has a law on this, taxes and airport rules are the more
     pressing issues. Now that peer to peer programs own their own fleet, there is no difference
     between brick and mortar rental companies and peer to peer car sharing.

     OTHER: The OIC believes that the bill was created for states that didn't have peer-to-peer
     car sharing programs. OIC doesn't think the minimum protections will adequately protect
     Washingtonians and visitors to the state. Current state law requires three times the
     minimum, and this bill will require the bare minimum. This bill will also allow for the
     commercial use of peer to peer vehicles, which is currently not legal. Because Washington
     has a law on this, taxes and airport rules are the more pressing issues.

     Persons Testifying: PRO: Representative Chris Corry, Prime Sponsor; Soledad Roybal,
     Getaround; Kenny Montilla, Turo; Sean Vinck, Turo.

     CON: Kelly Fukai.

     OTHER: Jon Noski, Office of the Insurance Commissioner; Michael Walker, Office of the
     Insurance Commissioner; Jeff Gombosky, Enterprise Holdings; Eric ffitch, Port of Seattle.

     Persons Signed In To Testify But Not Testifying: No one.




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