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Colorado legislature proposes new regulation of companies that book car transportation services via digital applications

By Daniel E DAngelo Esq on March 10, 2014

City Street with Taxis

The Colorado State Senate is currently working on a bill (SB14-125) concerning the regulation of Transportation Network Companies (like Uber, Lyft, SideCar, Wingz, and InstantCab) to require those companies to carry liability insurance, conduct background checks on drivers, inspect company vehicles, and get a permit from the Colorado Public Utilities Commission like taxi cabs and limousines. A Transportation Network Company uses a digital network to connect riders to the Transportation Network Company for the purpose of providing transportation, it does not provide a taxi service and does not own, control, operate, or manage the personal vehicles used by the transportation network company driver(s). Most drivers who transport riders in this type of car service use their personal vehicle.

The proposed legislation is Colorado’s attempt to protect riders using this type of car service from a situation where they may suffer very serious injuries and the vehicle they are riding in is uninsured or underinsured. Most consumers who book a car service via a digital application would be surprised to learn that the company they booked through likely does not provide insurance coverage for them. Consumers and drivers may also be surprised to learn that the driver’s personal insurance, if any, is unlikely to cover them in an accident. This is because most, if not all, personal automobile insurance policies do not provide coverage when a personal vehicle is used for business purposes. So, if the driver did not purchase a commercial policy, then both the driver and rider would have no available insurance coverage. Any third party hurt in a collision would also be without insurance coverage from the driver if the driver was at fault.

If the new law passes, starting July 1, 2014, Transportation Network Companies must have liability insurance of $1,000,000.00 per occurrence for incidents involving a driver during a prearranged ride, and the driver must maintain at all times personal automotive liability insurance equal to the Colorado minimum (which is $15,000 for property damage, and $25,000 per person for bodily injuries/$50,000 maximum per incident). Network Drivers may not accept a rider unless booked through a digital network, and thus a Network Driver may not accept a “street hail.”

Riders will be insured under the Transportation Network Company’s liability policy while riding in the vehicle, and Network Drivers and Riders must be informed that the Driver’s personal policy may not apply to them during a prearranged ride.

The Transportation Network Company must do background checks on the Network Drivers, and depending on the applicant driver’s criminal history, may not be able to participate in the transportation network. According to the proposed law, the Transportation Network Company may not permit the applicant to become a Network Driver if the applicant has been convicted, pled guilty, or pled nolo contendere to:

• driving under the influence of drugs or alcohol in the seven years before applying to become a transportation company network driver;
• an offense involving fraud;
• an offense involving unlawful sexual behavior;
• an offense against property, such as burglary, robbery, theft;
• a crime of violence, such as murder, first or second degree assault, or kidnapping;
• a felony in the previous five years; or
• more than three moving violations in the three-year period before application.