Arizona Senate carves out new insurance rules for taxi firms that provide ride-hailing service

Markets Associated Press

Arizona taxi companies that also operate ride-hailing services won a major concession Tuesday on insurance in a bill overhauling regulations for firms such as Uber and Lyft.

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A Senate amendment to the bill by Republican Rep. Karen Fann allows taxi companies that provide ride-hailing to have policies that provide minimum insurance coverage when only the driver is in the car and higher limits at times they have a passenger.

That marked a change from a deal cut by Fann that required the companies to carry full taxi coverage even while they were looking for street hails.

House Bill 2135 received initial Senate approval on Tuesday but the effect of the amendment remained unclear.

Fann negotiated the deal between taxi firms, ride-hailing companies and insurers, and unveiled it in early March. It then won House approval.

The original deal required the taxi-operated, ride-hailing cars to have $250,000 in liability insurance even when looking for street hails. Fann said true ride-share companies such as Uber and Lyft aren't allowed to take street hails so their drivers were allowed to carry just $25,000 in insurance when drivers had the web-based app turned on.

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Some senators pushed back at the ride-hailing change, which they said weakened the entire deal.

"What we should have done is make the Uber driver from point of turning on their app to point of turning it off having the same insurance coverage that the taxi driver would have," said Sen. Lupe Contreras, D-Avondale. "Because status quo was that taxi drivers have full insurance."

The legislation's intent is to lay out a new regulatory scheme for ride-hailing companies and set minimum insurance rules. It also requires vehicle inspections, driver background checks and a zero-tolerance policy for drug and alcohol use by drivers.

One of the biggest issues involved insurance regulations for drivers who use the app-based system to answer calls. The companies provide insurance while drivers have a fare, but while they're awaiting dispatch they had only been covered by their personal policies.

The bill requires drivers to carry special insurance riders for those times that provide a minimum of $25,000 coverage, nearly twice the state minimum. When they have a passenger, the coverage must jump to a minimum of $250,000.

Taxi companies would have been required to carry the higher limits. Their ride-hailing units also would have been required to have the higher coverage because their drivers are looking for business while they drive around.

Fann fought for weeks to prevent the amendment adopted by the Senate. She withheld comment on its effects.

Lawmakers passed a bill last year that would have exempted the new app-based transportation companies from insurance regulations imposed on traditional taxi and livery companies. It was vetoed by then-Gov. Jan Brewer, who said it failed to protect consumers.

The companies continued to operate, and the state Weights and Measures Department had issued nearly 100 citations by November to drivers who did not have proper commercial licenses or insurance. Gov. Doug Ducey halted the policy in January, saying it wasn't working and was hampering job creation.