The $1 Million TNC Coverage Myth

Bottom line. Of all the defense tactics in TNC litigation, the most expensive and the most preventable is the $1 million coverage stipulation. The statute the TNCs themselves operate under tells them otherwise. Public Utilities Code § 5433(f) preserves TNC liability above the required coverage. The Rutkovitz Proposition 51 footnote forecloses apportionment between the TNC and the driver. Together, they dismantle the corporate liability cap on which the entire TNC settlement strategy depends.

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A. The statute forecloses the $1 million ceiling

Public Utilities Code § 5433(f) is unambiguous:

"[T]he insurance requirements shall not limit the liability of a transportation network company arising out of an automobile accident involving a participating driver in any action for damages against a transportation network company for an amount above the required insurance coverage."

That is the savings clause. The Legislature wrote it for one purpose: to prevent the precise argument the TNCs now press in settlement and at trial. The $1 million coverage is a floor on insurance, not a ceiling on liability.

The clause does double work:

1. It presupposes that TNC liability can exceed the insurance minimums. The Legislature would not have preserved liability for amounts "above the required insurance coverage" unless TNC liability could reach those amounts.
2. It confirms the relationship between the insurance requirements and the substantive imputation rule in § 5354. If § 5354 did not impute driver negligence to the TNC, there would be no TNC liability for a motor vehicle accident to preserve, and § 5433(f) would be superfluous. Statutory construction abhors surplusage. (People v. Valencia (2017) 3 Cal.5th 347, 357.)

The Legislature wrote § 5354 to make the driver's negligence the TNC's own act, and § 5433(f) to make clear that the TNC's resulting liability is not capped by the insurance the TNC is required to carry. § 5354 deep dive →

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B. How the trick works in practice

The defense playbook on coverage is consistent across cases. The pattern is worth knowing because plaintiffs' lawyers who recognize it can refuse the bait and reframe the negotiation.

1. Early anchoring

In initial settlement conferences, defense counsel introduces the statutory coverage minimum (the policy limits under § 5433(f); subject to verification at policy-issuance date) as the relevant universe and treats damages above the policy as theoretical. The framing becomes a habit before it becomes an argument.

2. The stipulation trap

Defense counsel proposes a coverage stipulation. The proposal is framed as procedural housekeeping: "We're not contesting coverage, so let's just stipulate to the statutory coverage minimum (the policy limits under § 5433(f))." The stipulation, if accepted, can be read by a neutral or jury as an agreement that the policy is the case's outer limit.

Plaintiffs' counsel never have to stipulate to this. The TNC's coverage obligations are statutory, public, and incorporated into the permit. The plaintiff can prove them without help.

3. The MIL pinch

Defense moves in limine to exclude evidence of the TNC's net worth, market capitalization, or financial condition. The motion is presented as an evidentiary cleanup. If granted, the panel or jury hears only about the statutory coverage minimum and never sees the corporate balance sheet that puts the policy in proper context.

4. The closing pitch

In closing, defense argues that the policy is "more than sufficient" and that the TNC "is not on the hook above that." The pitch works only if plaintiff's counsel has already accepted the framing in the opening rounds.

The countermove

• Refuse the stipulation.
• Authenticate the coverage requirement through CPUC documents and the permit itself, not through agreement with the defense.
• Treat the statutory coverage minimum (the policy limits under § 5433(f)) as a regulatory minimum and the TNC's corporate balance sheet as the relevant universe of recovery.
• Oppose the MIL on net worth on punitive damages and on Proposition 51 single-tortfeasor grounds.
• The statute is on your side. Use it.

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C. Why § 5433(f) is the cleanest single-sentence brief in TNC litigation

Few statutory arguments are more direct in a TNC case than § 5433(f). The text is short. The legislative direction is unambiguous. The defense reading should be tested against the statutory text. And it has a built-in answer to every variant of the defense argument:

Defense argument	§ 5433(f) answer
Coverage is a ceiling	§ 5433(f) preserves liability above coverage
The insurance program substitutes for vicarious liability	§ 5433(f) preserves vicarious liability above the insurance program
Prop 22 implicitly capped exposure at the insurance minimums	§ 5433(f) is in the Public Utilities Code, which Prop 22 did not touch

The statute is the most efficient point of leverage in the TNC defense and it should be invoked early and often.

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D. Proposition 51 single-tortfeasor doctrine closes the other half of the cap

The other half of the TNC's settlement-leverage argument is Proposition 51 apportionment under Civil Code § 1431.2. The argument is that § 1431.2 caps the TNC's non-economic exposure at its proportionate share of the verdict, with the driver bearing the remainder.

The argument fails because § 5354 imputation makes the TNC and driver a single tortfeasor for damages-allocation purposes. The Rutkovitz arbitrator made the holding express in footnote 1 of the award:

"Civil Code Section 1431.2 (Proposition 51) does not require apportionment where a Defendant's liability is derivative of another's negligence. Because Uber's liability is statutorily imputed under PUC Code Section 5354, Uber and the driver are treated as a single tortfeasor for purposes of Section 1431.2, and no allocation of non-economic damages is required."

The footnote tracks established California vicarious-liability doctrine:

"When a defendant is liable only by reason of a derivative nondelegable duty arising from his status as employer or landlord or vehicle owner or coconspirator . . . his liability is secondary (vicarious) to that of the actor and he is not entitled to the benefits of Proposition 51." (Bayer-Bel v. Litovsky (2008) 159 Cal.App.4th 396, 400; see also Miller v. Stouffer (1992) 9 Cal.App.4th 70, 83-85; Wilson v. Ritto (2003) 105 Cal.App.4th 361, 369.)

Section 5354 imputation operates exactly like respondeat superior for damages-allocation purposes, treating the principal and agent as a unified entity.

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E. The practical consequence

The TNC's risk model in most cases assumes a Proposition 51 reduction will limit the corporation's non-economic exposure pre-trial. The Rutkovitz footnote eliminates that discount. The full verdict may be in play.

Combined with § 5433(f), the result is the dismantling of the corporate liability cap on which the TNC's entire settlement strategy depends. The case is no longer a statutory-coverage-minimum / Prop 51 dispute. It is a full-damages dispute.

That changes:

• Settlement leverage. No more anchoring to the statutory coverage minimum.
• Trial preparation. The corporate-balance-sheet evidence becomes relevant.
• Demand strategy. Quote § 5433(f) and the Rutkovitz footnote in every demand.

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Practitioner playbook

1. Refuse the coverage stipulation. Authenticate coverage through CPUC documents and the permit. Do not give defense counsel the procedural housekeeping they want.
2. Quote § 5433(f) in every demand and in every brief. Single sentence. Unambiguous.
3. Quote the Rutkovitz footnote in every Prop 51 dispute. The fact that an experienced AAA neutral made the holding on a full record matters.
4. Build the corporate-finance record in discovery. Net worth, market cap, balance sheet, insurance program. Use discovery roadmap category (22).
5. Oppose net-worth MILs on Prop 51 single-tortfeasor and punitive grounds. The defense's evidentiary cleanup is the heart of the cap strategy.
6. Frame the case as full-damages from Day One. Settlement framing leaks into deposition and trial framing. Set the floor early.

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See also

• Hub: The Seven-Theory Framework
• PUC § 5354 — Statutory Imputation Without Employment
• Proposition 22 Is a Labor Statute, Not a Tort Immunity
• TNC Discovery Roadmap — 24 Categories
• Press: April 30, 2026 Daily Journal Byline + Rutkovitz Award

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