DENVER (AP) — Internet companies that connect riders to drivers with a few taps on a cellphone app will be regulated in Colorado with legislation soon to become law, putting the state at the forefront of a push to try to legitimize the flourishing tech startups.
The entry into the transportation marketplace by companies like Uber and Lyft has left legislators and local officials struggling to catch up with emerging technology that competes with traditional taxis and limos, but with less overhead. The drivers of the new companies, for example, use their personal cars and often do it for extra cash to supplement their income at other jobs.
A handful of state legislatures this year have tried and failed to pass bills to provide oversight for the so-called ridesharing 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.
But Colorado's attempt at regulation is the first to come out of a state legislature, according to research from the National Conference of State Legislatures.
The bill that Colorado lawmakers passed this month, expected to be signed by Democratic Gov. John Hickenlooper, will allow the companies to continue to operate in the state. Without a legislative fix, the companies faced formal complaints from the state's public utilities commission, which has maintained that Lyft and Uber's lower-cost carrier, UberX, have been operating illegally.
No date has been set for the bill signing, said Eric Brown, Hickenlooper's spokesman.
"What this does is it welcomes technology and innovation to Colorado," said Rep. Dan Pabon, D-Denver, one of the bill's sponsors.
The bill puts Lyft and UberX under the oversight of the state'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 driver's 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.
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