DENVER — Leading a push to legitimize Internet companies that connect riders to drivers with a few taps on a cellphone app, Colorado has become the first state whose legislature passed a law regulating companies like UberX and Lyft.
Gov. John Hickenlooper signed the bill Thursday.
“Consumer protection is a worthy goal that we endorse, but rules designed to protect consumers should not burden businesses with unnecessary red tape or stifle competition by creating barriers to entry,” Hickenlooper said in a statement released with the signing.
The entry into the transportation marketplace by the ridesharing companies has left officials nationwide struggling to catch up with emerging technology that competes with traditional taxis and limos, but with less overhead.
A handful of state legislatures this year have tried and failed to pass bills to provide oversight for ride-sharing companies. Taxi and limo companies have objected, arguing the Web-based businesses have an unfair advantage and light regulation. Several municipalities nationwide are also grappling with the issue.
California passed statewide ridesharing regulations last year through its public utilities commission. Colorado’s is the first to emerge from a legislature.
“What this does is it welcomes technology and innovation to Colorado,” said Rep. Dan Pabon, D-Denver, one of the sponsors of Colorado’s law.
The bill puts Lyft and UberX under the oversight of Colorado’s public utilities commission. The companies will be classified as transportation network companies, or TNCs, separate from taxis and limos.
To obtain permits, the companies must have drivers pass criminal-background and driving-history checks. The drivers’ cars must pass vehicle inspections, and be clearly marked as TNC cars.
The drivers must also carry personal car insurance, in addition to the commercial insurance Uber and Lyft provide.
Insurance was the biggest issue of concern in Colorado, and it has been a major sticking point in other states because there’s confusion about which insurer — the driver’s personal carrier or the companies’— should be responsible in case of an accident. The uncertainty centers around a potential gap in coverage when a driver is on the app waiting to be connected to a rider. Personal car insurance policies don’t cover drivers who use their cars for a commercial purpose.