The California Public Utilities Commission (CPUC) proposed new regulations for online-based car-sharing services like Lyft, Sidecar and Uber last week. Using an online platform, these car-sharing companies provide transportation services by connecting passengers with drivers using their personal vehicles.

According to the CPUC proposal, the new rules, which could become effective as soon as Sept. 5, would put these transportation network companies into a new transportation business category that’s separate from taxicabs and limousine services.

In order to operate in California, transportation network companies need to be licensed by the CPUC and every driver must go through a criminal background check, according to the proposal. In addition, each company is required to create a driver training program and apply a zero-tolerance policy on drugs and alcohol.

When it comes to insurance, transportation network companies will need to maintain liability insurance policies that provide a minimum of $1 million per incident, says the proposal. This is stricter compared to a limousine’s insurance requirements — a minimum coverage of $750,000 with seven passengers or fewer.

“We couldn’t be more pleased with this outcome and applaud the CPUC for moving in favor of transportation innovation and consumer choice,” said Rachael King, national social media manager at Sidecar. “… We hope cities around the country follow California’s lead and champion innovation and sharing.”

Last month, car-sharing companies Sidecar, Lyft and Uber received cease-and-desist letters from the Los Angeles Department of Transportation’s taxicab administrator.

By Amy Winter