Colorado Likely First To Legislatively Authorize Ride-Share Services

As reported by the Denver Post: Colorado is set to become the first state in the country to legislatively authorize ride-sharing services offered by UberX and Lyft.

The Senate on Tuesday approved a House-amended version of Senate Bill 125 that closes the controversial insurance gap, sending the bill to Gov. John Hickenlooper's desk.

Hickenlooper's office has urged lawmakers to pass the much-debated measure because without it, Lyft and UberX would be forced to cease operations in the state, dealing a blow to Colorado's reputation as an innovation hub.

SB 125 officially would authorize the services and place Lyft, UberX and other so-called transportation network companies, or TNCs, under limited state regulation.

Lawmakers in Arizona, California and Illinois also have taken up the issue of regulating ride-share companies. Arizona Gov. Jan Brewer vetoed her state's bill last week because of concerns about insurance coverage and lack of drug testing for drivers.

Ride-sharing drivers use their personal cars for fares and connect with passengers via smartphone apps. Fares generally are lower than taxi service. Taxi officials have argued the TNCs have an unfair advantage because they don't face the same regulations.

The final version of SB 125 requires car-sharing companies, or their drivers, to carry primary commercial insurance coverage for the period when a driver has logged into their Lyft or UberX app but hasn't been hailed. Insurers had threatened to raise rates if they were forced to cover that period with a driver's personal auto policy, arguing that the driver is engaged in commercial activity at that point.

"We were able to address that critical issue in making sure there were no gaps in coverage during the commercial activity, at least for liability coverage," said Kelly Campbell, a lobbyist with Property Casualty Insurers Association of America.

The bill allows TNCs to carry contingent coverage — which kicks in if a driver's personal policy doesn't cover damages — for the gap period until Jan. 15. At that time, the gap coverage has to be primary, either through the driver or the TNC.

SB 125 also requires TNCs to provide primary liability coverage between the time a fare has been hailed and the passenger has been dropped off.

"We look forward to Gov. Hickenlooper signing the bill to secure a future that will allow ride-sharing to grow and thrive in the state of Colorado for years to come," Lyft said in a statement.

Uber, the parent company of UberX, still has some concerns about certain regulatory controls the state will have over the ride-sharing service.

"All in all, it's a very good thing that this legislature cleared the way for TNCs to operate in Colorado," Uber attorney Greg Sopkin said.

Lyft launched service in Denver in September, with UberX following a few weeks later. Lyft has since expanded to Colorado Springs.

"We're the first in the nation to legislatively authorize this," Uber attorney Ray Gifford said. "That should be a point of pride for Colorado."