Arizona House gives initial OK to new rules for ride-hailing industry amid talks on final deal

After weeks of negotiations on how to overhaul regulations for ride-hailing companies like Uber and Lyft, the sponsor of an Arizona House proposal declared the job virtually done Wednesday, and the House approved the proposal.

Republican Rep. Karen Fann unveiled details of a deal she's negotiated between taxi firms, ride-hailing companies and insurers on the House floor, saying it fixes nearly all the problems that have stymied regulation of the new business model.

The House voted 55-0 for House Bill 2135 and sent it to the Senate for action.

The legislation lays out a regulatory scheme for ride-hailing companies and sets minimum insurance rules. It also requires vehicle inspections, driver background checks, and sets a zero-tolerance policy for drug and alcohol use by drivers.

One of the biggest issues was over 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 been only covered by their personal policies.

Fann said 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 they must have a minimum of $250,000 in coverage, which companies like Uber and Lyft provide.

Taxi companies that also run ride-hailing services would fall under the same rules for those operations but regular taxi regulations for their normal operations.

"I think we have got it nailed down pretty well," Fann said. "I think we will probably be 98 percent good with what we send out of here," to the Senate.

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.