California’s War on Uber Continues

Insurers use the term “social inflation” to refer to rising costs of litigation, which are ultimately borne by businesses, workers and customers. A case in point is Uber’s decision to raise the minimum age for new ride-share drivers in California to 25 from 19 this week.

Uber attributed the decision to the skyrocketing costs of commercial auto insurance in California owing to lawsuits and state requirements. “Insurance coverage requirements for rideshare are baselessly higher than nearly every other car on the road: up to 30 times that of taxis and 30 times that of personal vehicles,” Uber said in a statement.

“Personal injury attorneys have created a cottage industry specializing in suing rideshare platforms like ours, pushing Uber’s California state-mandated commercial insurance costs to rise by more than 65% in just two years,” the statement added. “By increasing the age requirement for new drivers to 25, we hope to mitigate the growth of those costs.”

California law requires ride-share companies to carry a $1 million bodily injury liability policy. Even when drivers have the apps on and aren’t transporting passengers, the policy must cover $100,000 in injuries. Driving up insurance costs are dishonest trial lawyers who inflate medical claims.

The political war on ride-share companies in California is relentless. Plaintiff attorneys in California have tried to shake down the companies for allegedly violating labor laws. Democratic lawmakers tried to destroy their business model by classifying drivers as employees, which voters blocked with a 2020 ballot referendum.

Uber’s higher minimum age will shrink the supply of drivers, which will increase fares. As usual in California, when progressive policy boomerangs, the biggest casualties are those who can least afford it.