HB 3520 is a well-reasoned and timely response to gaps in Texas law governing the insurance requirements for drivers operating under transportation network companies (TNCs), such as Uber and Lyft. Current statute defines insurance obligations based primarily on whether a passenger is in the vehicle, leaving ambiguity and potential liability exposure when a driver is en route to pick up a rider or logged into the app but awaiting a trip request. HB 3520 resolves this by extending consistent insurance requirements across all operational stages of a TNC driver’s work.
Specifically, the bill mandates a minimum of $50,000 for bodily injury or death per person, $100,000 per incident, and $25,000 for property damage when the driver is logged into the app but not carrying a rider. When a rider is in the vehicle, the bill requires $1 million in total liability coverage per incident. It also affirms the applicability of uninsured/underinsured motorist and personal injury protection coverage where required by existing law. These standards ensure that drivers, passengers, and third parties are all better protected in the event of an accident, regardless of the exact stage of the ride.
Importantly, the bill is narrowly tailored and does not expand the size or scope of state government. It imposes no new fiscal burden on taxpayers, as confirmed by the Legislative Budget Board, and any implementation responsibilities fall within the existing authority and capacity of the Texas Department of Insurance. Additionally, the bill does not grant new rulemaking powers or establish any new regulatory bodies.
Concerns about increased costs or regulatory burdens on TNCs and drivers are valid, as higher minimum insurance thresholds could translate into higher premiums. However, these costs are proportionate to the risk involved in transporting passengers for compensation and are already reflected in the commercial insurance requirements of many similar service models. Moreover, the bill adds predictability to the insurance market, enabling insurers to set rates with clearer expectations and reducing the chance of coverage disputes after accidents.
HB 3520 also has the effect of aligning Texas with other states that have modernized their insurance requirements for rideshare services. This promotes consistency in consumer protection and helps sustain public trust in the safety of these platforms. By addressing real-world risks without expanding government or increasing taxes, the bill achieves a pragmatic balance between regulation and liberty.
HB 3520 addresses a known policy gap in a fast-evolving segment of the economy, improves public safety, and creates a more equitable insurance structure for all parties involved. It does so without growing government or imposing taxpayer costs, making it a responsible and necessary update to Texas law. For these reasons, Texas Policy Research recommends that lawmakers vote YES on HB 3520.
- Individual Liberty: The bill strengthens individual liberty by ensuring that both drivers and passengers have consistent legal protection through all stages of a rideshare trip. When individuals engage with a TNC, whether as a rider or a driver, they do so with the expectation that they are protected if something goes wrong. By clarifying insurance coverage during “gray areas” (such as when a driver is en route to pick up a passenger), the bill reinforces legal certainty and peace of mind, empowering individuals to participate more freely in the gig economy with clearly defined risk protections.
- Personal Responsibility: The bill enhances personal responsibility by requiring drivers and TNCs to carry insurance that matches the real-world risks of their operations. It ensures that those choosing to earn income by providing rideshare services are also accepting responsibility for having adequate financial protection in place should an accident occur. In doing so, the bill reinforces the principle that freedom to engage in enterprise must be paired with responsibility for potential consequences.
- Free Enterprise: The bill has a mixed impact on free enterprise. On one hand, it creates clearer legal and regulatory conditions, which may reduce uncertainty and encourage more responsible competition among TNCs and insurers. It also levels the playing field by standardizing coverage requirements across platforms. On the other hand, it imposes higher insurance requirements on drivers and companies, which could raise costs. Smaller or newer TNCs might struggle to meet the standards, and independent drivers may see increased premiums. While these are legitimate trade-offs, they reflect an effort to balance open markets with public safety.
- Private Property Rights: The bill affirms and supports private property rights by allowing individuals to use their personal vehicles for commercial purposes with clearly defined legal protections. It ensures that the owner's use of their vehicle as a source of income doesn’t expose them to disproportionate financial risk due to legal ambiguity. In fact, by requiring proper insurance, it helps protect their property (the vehicle) from exposure to third-party claims that could otherwise jeopardize their financial stability.
- Limited Government: The bill maintains the principle of limited government. It does not create any new government agencies, programs, or enforcement structures, nor does it expand regulatory oversight powers. It simply refines existing insurance statutes to close loopholes and ensure better protection. It does not grow the state’s footprint or impose new fiscal burdens on taxpayers, and implementation is to be absorbed by existing regulatory infrastructure.
