In June Colorado became the first state in the U.S. to pass a law regulating the booming personal taxi service industry operated by Lyft and UberX. The law addresses many concerns which have existed with the new business, such as requiring vehicle inspections and driver background checks as well as insurance concerns. The law applies only to Lyft and UberX, currently the only two such services currently operating in Colorado.

Although the services exist in other states, Colorado is the first to pass rules on personal taxis through the state government. California, the only other state to regulate the industry, has rules created by the state utilities commission. In Colorado the industry will be regulated by the Public Utilities Commission.

The service is so new that there is still inconsistency on what to call it. Colorado and California have chosen Transportation Network Companies (TNC). the TNCs use digital networks to connect passengers with drivers using their own cars. Both services offer an app that not only locates the driver and calculates estimated arrival time, but provides a picture of the driver and the car so the passenger knows who they are riding with. Lyft drivers display a large pink mustache on the front grill of their car to make them easy to identify.

At the end of the ride the passenger is allowed to rate the driver, but the driver also has the opportunity to rate the passenger. Driver scores are available to the public, passenger scores seen only by drivers. According to a DC-based driver a passenger’s score can go down for being too drunk, giving directions to a wrong location or treating the driver poorly.

Since personal taxi services such as Lyft and UberX are not regulated in most of the U.S., not everyone knows about the new law in Colorado, as one passenger found out when his ride-share car was pulled over by a Denver police officer this week. Dave Cook’s trip to the airport came to a sudden stop when the car was pulled over for speeding. After taking the driver’s information the officer asked Cook if he was paying for the ride, and then informed him that Uber was illegal in the state. The Denver police department has since apologized for the incident.

The taxi industry, highly regulated throughout the U.S., has expressed concern and lobbied for stricter laws related to the new ride-share services. Some cities have tried to stop the companies from operating until regulations are set, but for the most part those orders have been ignored. The service attests that they are merely technology companies that connect passengers and drivers, but critics cite the complicating factor of the driver being able to switch from personal to commercial activity with the press of a button.

The Colorado law helps clarify logging-in requirements for insurance purposes, stating that the service must provide coverage once the driver logs in, whether the driver has a passenger or is on the way to pick one up or not. There has been confusion as to whether the service’s insurance or the driver’s personal insurance should be the one to pay in case of an incident, particularly when there is confusion as to whether or not the driver is “on duty.”

The Colorado law makes the UberX or Lyft service’s insurance coverage the first payer regardless of the personal taxi driver’s policy. Personal auto insurers had suggested that without this provision rates could have risen for all drivers.

By Beth A. Balen

Sources:

The Denver Post

Business Insider

The Washington Post

Denver Business Journal

ABC News Denver

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