Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 20-1631, Arizona Revised Statutes, is amended to read:

START_STATUTE20-1631. Definition of motor vehicle; cancellation of or failure to renew coverage; limitations; limitation of liability; exceptions; insurance producers; definitions

A. In this article, unless the context otherwise requires, "motor vehicle" means a licensed land, motor‑driven vehicle but does not mean:

1. A private passenger or station wagon type vehicle used as a public or livery conveyance or rented to others.

2. Any other four‑wheel motor vehicle of a load capacity of fifteen hundred pounds or less that is used in the business of transporting passengers for hire, used in business primarily to transport property or equipment, used as a public or livery conveyance or rented to others.

3. Any motor vehicle with a load capacity of more than fifteen hundred pounds.

4. From and after February 29, 2016, a vehicle that otherwise qualifies as a motor vehicle under this subsection but only while the driver of the vehicle is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services, unless expressly covered by the private passenger policy.

B. A motor vehicle used as a public or livery conveyance or rented to others does not include a motor vehicle used in the course of volunteer work for a tax‑exempt organization as described in section 43‑1201, subsection A, paragraph 4.

C. An insurer shall not cancel or refuse to renew a motor vehicle insurance policy solely because of the location of residence, age, race, color, religion, sex, national origin or ancestry of anyone who is an insured.

D. An insurer shall not issue a motor vehicle insurance policy in this state unless the cancellation and renewal conditions of the policy or the endorsement on the policy includes the limitations required by this section. After a policy issued in this state has been in effect for sixty days, or if the policy is a renewal, effective immediately, the company shall not exercise its right to cancel or fail to renew the insurance afforded under the policy unless:

1. The named insured fails to discharge when due any of the obligations of the named insured in connection with the payment of premium for this policy or any installment of the premium.

2. The insurance was obtained through fraudulent misrepresentation.

3. The named insured, any person who resides in the same household as the named insured and customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy:

(a) Has had the person's driver license suspended or revoked during the policy period.

(b) Develops a permanent disability, either physically or mentally, and such individual does not produce a certificate from a physician or a registered nurse practitioner testifying to such person's ability to operate a motor vehicle.

(c) Is or has been convicted during the thirty‑six months immediately preceding the effective date of the policy or during the policy period of:

(i) Criminal negligence resulting in death, homicide or assault and arising out of the operation of a motor vehicle.

(ii) Operating a motor vehicle while in an intoxicated condition or while under the influence of drugs.

(iii) Leaving the scene of an accident.

(iv) Making false statements in an application for a driver license.

(v) Reckless driving.

4. The insurer is placed in rehabilitation or receivership by the insurance supervisory official in its state of domicile or by a court of competent jurisdiction or the director has suspended the insurer's certificate of authority based on its financially hazardous condition.

5. The named insured, any person who resides in the same household as the named insured and customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy uses a motor vehicle rated or insured under the policy as a private passenger motor vehicle regularly and frequently for commercial purposes.

6. From and after February 29, 2016, the named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy uses a motor vehicle rated or insured under the policy to provide transportation network services unless, while the driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services, The named insured either:

(a) Has procured an endorsement to the private passenger policy that expressly provides such coverage.

(b) Is covered by a motor vehicle liability insurance policy issued by another insurer expressly providing such coverage.

6. 7. The director determines that the continuation of the policy would place the insurer in violation of the laws of this state or would jeopardize the solvency of the insurer.

7. 8. If the insured and the insured's family members are eligible for insurance based solely on the insured's employment with the insurer, employment of the insured with that insurer is terminated and the insurer exercises its right to nonrenew the policy within twelve months following the insured's termination of employment.

E. In addition to the authorization to fail to renew insurance provided by subsection D of this section, an insurer may exercise its right to fail to renew a motor vehicle insurance policy pursuant to this subsection.� An insurer shall provide notice of the nonrenewal to the named insured as prescribed by section 20‑1632 at least forty‑five days before the nonrenewal. A named insured who disputes the nonrenewal of the named insured's policy may file an objection with the director pursuant to section 20‑1633.� An insurer shall not fail to renew more than one‑half of one per cent percent of its policies annually pursuant to this subsection. An insurer may fail to renew a motor vehicle insurance policy if the named insured, any person who resides in the same household as the named insured and who customarily operates a motor vehicle insured under the policy or any other person who regularly and frequently operates a motor vehicle insured under the policy has had at any time during the thirty‑six months immediately before the notice of nonrenewal three or more at‑fault accidents under any motor vehicle insurance policy issued by this insurer in which the property damage paid by the insurer for each accident that occurred prior to January 1, 2000 is more than one thousand eight hundred dollars. For accidents occurring on or after January 1, 2000, the department of insurance shall annually adjust and publish, to the nearest ten dollars, the threshold amount of property damages in this subsection by the percentage change in the all items component of the consumer price index for all urban consumers of the United States department of labor, bureau of labor statistics. The insurer shall not exercise its right to fail to renew the insurance under this subsection unless the same individual has had all the accidents that make the policy subject to nonrenewal under this subsection.� The insurer shall not exercise its right to fail to renew a motor vehicle insurance policy pursuant to this subsection due to the accident record of the named insured if the named insured has been insured for standard automobile bodily injury coverage for at least ten consecutive years with the same insurer prior to the most recent accident that makes the policy subject to nonrenewal under this subsection. For the purposes of this subsection, "at‑fault" means the insured is at least fifty per cent percent responsible for the accident.

F. The company shall not cancel or fail to renew the insurance when a person other than the named insured has violated subsection D, paragraph 3 of this section, or fail to renew the insurance pursuant to subsection E of this section due to the driving record of an individual other than the named insured, if the named insured in writing agrees to exclude as insured the person by name when operating a motor vehicle and further agrees to exclude coverage to the named insured for any negligence that may be imputed by law to the named insured arising out of the maintenance, operation or use of a motor vehicle by the excluded person.� The written agreement that excludes coverage under a policy for a named individual is effective for each renewal of the policy by the insurer and remains in effect until the insurer agrees in writing to provide coverage for the named individual who was previously excluded from coverage.

G. This article does not apply to any policy that has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless the policy is a renewal policy, or to policies:

1. Insuring any motor vehicle other than a private passenger motor vehicle as defined in section 20‑117.

2. Insuring the motor vehicle hazard of garages, motor vehicle sales agencies, repair shops, service stations or public parking places.

3. Providing insurance only on an excess basis.

H. If a consumer purchases motor vehicle insurance coverage from an insurance producer licensed in this state, the insurance producer that owns the policy expiration shall remain the insurance producer of record for that insured. In the event the insurer terminates the insurance producer's contract, the insurance producer shall continue to provide customary services to the insured.� The insurer shall provide the insurance producer with a minimum degree of authority necessary to provide customary services to the insured and shall provide the same level of compensation for these services that were in effect prior to the termination of the insurance producer contract.

I. Subsection H of this section shall not apply if one or more of the following conditions exist:

1. The insurance producer of record has had its license suspended or revoked by the department.

2. The insurance producer of record is indebted to the insurer.

3. The insured has supplied the insurer with a written request that its insurance producer of record be changed to another insurance producer of the insurer.

4. The insurance producer of record has authorized transfer of this account to another licensed insurance producer of the insurer.

5. The director has determined after a public hearing that continuation of this relationship is not in the best interest of the public.

6. The insurance producer of record is under an exclusive contract or contract requiring the insurance producer to submit all eligible business to an insurer or group of insurers under a common management.

J. Subsection H of this section shall not apply to any transaction in which the expiration of the policies is owned by the insurer.

K. Notwithstanding any law to the contrary, the issuance at renewal of revised policy provisions to modify an existing policy by adding coverages or policy provisions, modifying coverages or policy provisions, or eliminating coverages or policy provisions is not a nonrenewal or cancellation of the policy if the modification of a basic coverage does not eliminate the essential benefit of that basic coverage.� If the modification of the basic coverage eliminates the essential benefit of the basic coverage, the director shall order the insurer to remove the modification from the policy.� This subsection does not allow the insurer, without the written consent of the insured, to eliminate the basic coverages of the policy or to reduce the monetary limits of any of the basic coverages of the policy that were selected and agreed on. This subsection does not limit a policyholder from continuing to renew uninsured or underinsured motorist coverage pursuant to section 20‑259.01. For the purposes of this subsection, "basic coverage" means any of the following:

1. Bodily injury coverage.

2. Property damage coverage.

3. Uninsured motorist coverage.

4. Underinsured motorist coverage.

5. Medical payments coverage.

6. Comprehensive coverage.

7. Collision coverage.

L. For the purposes of this section, "fail to renew" or "nonrenewal" does not include the issuance and delivery of a new policy within the same insurer or an insurer under the same ownership or management as the original insurer as provided in this subsection.� An insurer may transfer up to one per cent percent of its policies to an affiliated insurer within one calendar year if under a policy to be transferred one or more of the insureds that are insured under the policy have individually within the past thirty‑six months had two or more at‑fault accidents under any motor vehicle insurance policy issued by this insurer in which the property damage paid by the insurer for each accident exceeded one thousand five hundred dollars or individually have had three or more moving violations.� Moving violations for which an insured completes an approved traffic school program shall not be considered as a moving violation under this section.� A company shall not transfer a policy if a named insured agrees in writing to exclude as an insured a person or persons who each individually meet the criteria for transfer pursuant to this subsection and further agrees to exclude coverage for any negligence that may be imputed by law to the named insured arising out of the maintenance, operation or use of a motor vehicle by such excluded person or persons. An insurer shall transfer only those individuals responsible for the at‑fault accidents or moving violations, and the excluded or transferred insured's driving record shall not be used in determining rates, surcharges or premiums for the nonexcluded or nontransferred insured. The one per cent percent limit set forth in this subsection shall not apply to transfers of policies from the original insurer to another insurer under the same ownership or management as the original insurer if the rates charged by the other insurer are the same as or lower than the rates charged by the original insurer.� No insurer shall transfer policyholders because of their location of residence, age, race, color, religion, sex, national origin or ancestry. Transfers by an insurer pursuant to this subsection shall not be construed to permit a new unrestricted sixty day period for cancellation or nonrenewal.

M. Except as provided in this subsection, an insurer shall not refuse to renew a policy until after August 31, 1998, based on an insured's failure to maintain membership in a bona fide association, until both the insurer and bona fide association have complied with this subsection and shall not refuse to renew any coverage continuously in effect before September 1, 1998, subject to all the following:

1. In addition to any other reason provided in this section, an insurer may refuse to renew an insurance policy issued pursuant to this article if all of the following conditions apply:

(a) The insurer clearly discloses to the applicant and the insured in the application for insurance and insurance policy that both the payment of dues and current membership in the bona fide association are prerequisites to obtaining or renewing the insurance.

(b) Any money paid to the bona fide association as a membership fee:

(i) Is not used by the insurer directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance.

(ii) Is set independently of any factor used by the insurer to make any judgment or determination about the eligibility of any individual, including the member, an employee of a member or a dependent of a member, to purchase or renew the insurance.

(c) The bona fide association has filed a certification with the director verifying the eligibility of the insurer to refuse to renew an insurance policy based on membership in the bona fide association.

2. To qualify as a bona fide association pursuant to this subsection, the association shall meet all of the requirements of this paragraph. The association shall file a statement with the director at least thirty days before the commencement of the offer or sale of insurance as provided by this subsection verifying that the association meets the requirements of this paragraph. The association shall update the filing required by this paragraph at least thirty days before the effective date of any material change in the information contained in the statement, and shall file a separate notice with the director if the insurance described in the statement is no longer available through the association. The statement shall include the following information:

(a) That the association has been in active existence for at least five consecutive years immediately before the filing of the statement.

(b) That the association has been formed and maintained in good faith for purposes other than obtaining or providing insurance and does not condition membership in the association on the purchase of insurance.

(d) That the association does not condition membership in the association or set membership fees on the eligibility of any individual, including the member, an employee of the member or a dependent of the member, to purchase or renew the insurance, or on any factor that the insurer could not lawfully consider when setting rates.

(e) That the association has a relationship with a specific insurer or insurers and identifies the insurer or insurers.

3. Membership fees collected by the bona fide association are not premiums of the insurer that issued the coverage unless the bona fide association:

(a) Uses any portion of the membership fees directly or indirectly to defray any costs or expenses in connection with the sale or purchase of the insurance.

(b) Sets or adjusts membership fees for any member of the bona fide association based on any factor used by the insurer that issues the insurance to make any judgment or determination about the eligibility of any individual, including the member, an employee of the member or a dependent of the member, to purchase or renew the insurance.

4. If the membership fees constitute premiums pursuant to paragraph 3 of this subsection, an insurer shall not refuse to renew a policy as otherwise permitted by this subsection.

N. An insurer may issue an endorsement to a private passenger policy that expressly provides coverage for the provision of transportation network services, but that endorsement may not be treated as basic coverage as defined in subsection K of this section and any termination of the endorsement may not be treated as a modification of basic coverage. An insurer may terminate the endorsement allowed by this subsection by giving advance notice of the termination. Any notice by the insurer to the policyholder to terminate the endorsement allowed by this subsection shall be mailed to the named insured by United States mail at least forty‑five days before the effective date of the termination. The notice shall include an explanation to the named insured that the further provision of transportation network services following the effective date of the termination may subject the insured to cancellation or nonrenewal of the insured's private passenger motor vehicle policy.

O. This section and section 28‑4009 do not create an obligation of an insurer to offer, provide or issue a policy or an endorsement that includes coverage for any liability incurred while a transportation network company driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services.

P. For the purposes of this section, "transportation network company", "transportation network company driver" and "transportation network services" have the same meanings prescribed in section 41-2138. END_STATUTE

Sec. 2. Section 28-101, Arizona Revised Statutes, is amended to read:

START_STATUTE28-101. Definitions

In this title, unless the context otherwise requires:

1. "Alcohol" means any substance containing any form of alcohol, including ethanol, methanol, propynol and isopropynol.

2. "Alcohol concentration" if expressed as a percentage means either:

(a) The number of grams of alcohol per one hundred milliliters of blood.

(b) The number of grams of alcohol per two hundred ten liters of breath.

3. "All‑terrain vehicle" means either of the following:

(a) A motor vehicle that satisfies all of the following:

(i) Is designed primarily for recreational nonhighway all‑terrain travel.

(ii) Is fifty or fewer inches in width.

(iii) Has an unladen weight of one thousand two hundred pounds or less.

(iv) Travels on three or more nonhighway tires.

(v) Is operated on a public highway.

(b) A recreational off-highway vehicle that satisfies all of the following:

(i) Is designed primarily for recreational nonhighway all-terrain travel.

(ii) Is sixty‑five or fewer inches in width.

(iii) Has an unladen weight of one thousand eight hundred pounds or less.

(iv) Travels on four or more nonhighway tires.

4. "Authorized emergency vehicle" means any of the following:

(a) A fire department vehicle.

(b) A police vehicle.

(c) An ambulance or emergency vehicle of a municipal department or public service corporation that is designated or authorized by the department or a local authority.

(d) Any other ambulance, fire truck or rescue vehicle that is authorized by the department in its sole discretion and that meets liability insurance requirements prescribed by the department.

5. "Aviation fuel" means all flammable liquids composed of a mixture of selected hydrocarbons expressly manufactured and blended for the purpose of effectively and efficiently operating an internal combustion engine for use in an aircraft but does not include fuel for jet or turbine powered aircraft.

6. "Bicycle" means a device, including a racing wheelchair, that is propelled by human power and on which a person may ride and that has either:

(a) Two tandem wheels, either of which is more than sixteen inches in diameter.

(b) Three wheels in contact with the ground, any of which is more than sixteen inches in diameter.

7. "Board" means the transportation board.

8. "Bus" means a motor vehicle designed for carrying sixteen or more passengers, including the driver.

9. "Business district" means the territory contiguous to and including a highway if there are buildings in use for business or industrial purposes within any six hundred feet along the highway, including hotels, banks or office buildings, railroad stations and public buildings that occupy at least three hundred feet of frontage on one side or three hundred feet collectively on both sides of the highway.

10. "Combination of vehicles" means a truck or truck tractor and semitrailer and any trailer that it tows but does not include a forklift designed for the purpose of loading or unloading the truck, trailer or semitrailer.

11. "Controlled substance" means a substance so classified under section 102(6) of the controlled substances act (21 United States Code section 802(6)) and includes all substances listed in schedules I through V of 21 Code of Federal Regulations part 1308.

12. "Conviction" means:

(a) An unvacated adjudication of guilt or a determination that a person violated or failed to comply with the law in a court of original jurisdiction or by an authorized administrative tribunal.

(b) An unvacated forfeiture of bail or collateral deposited to secure the person's appearance in court.

(d) The payment of a fine or court costs.

13. "County highway" means a public road that is constructed and maintained by a county.

14. "Dealer" means a person who is engaged in the business of buying, selling or exchanging motor vehicles, trailers or semitrailers and who has an established place of business.

15. "Department" means the department of transportation acting directly or through its duly authorized officers and agents.

16. "Digital network or software application" has the same meaning prescribed in section 41‑2138.

16. 17. "Director" means the director of the department of transportation.

17. 18. "Drive" means to operate or be in actual physical control of a motor vehicle.

18. 19. "Driver" means a person who drives or is in actual physical control of a vehicle.

19. 20. "Driver license" means a license that is issued by a state to an individual and that authorizes the individual to drive a motor vehicle.

20. 21. "Electric personal assistive mobility device" means a self‑balancing two nontandem wheeled device with an electric propulsion system that limits the maximum speed of the device to fifteen miles per hour or less and that is designed to transport only one person.

21. 22. "Farm" means any lands primarily used for agriculture production.

22. 23. "Farm tractor" means a motor vehicle designed and used primarily as a farm implement for drawing implements of husbandry.

23. 24. "Foreign vehicle" means a motor vehicle, trailer or semitrailer that is brought into this state other than in the ordinary course of business by or through a manufacturer or dealer and that has not been registered in this state.

24. 25. "Golf cart" means a motor vehicle that has not less than three wheels in contact with the ground, that has an unladen weight of less than one thousand eight hundred pounds, that is designed to be and is operated at not more than twenty‑five miles per hour and that is designed to carry not more than four persons including the driver.

25. 26. "Hazardous material" means a material, and its mixtures or solutions, that the United States department of transportation determines under 49 Code of Federal Regulations is, or any quantity of a material listed as a select agent or toxin under 42 Code of Federal Regulations part 73 that is, capable of posing an unreasonable risk to health, safety and property if transported in commerce and that is required to be placarded or marked as required by the department's safety rules prescribed pursuant to chapter 14 of this title.

26. 27. "Implement of husbandry" means a vehicle designed primarily for agricultural purposes and used exclusively in the conduct of agricultural operations, including an implement or vehicle whether self‑propelled or otherwise that meets both of the following conditions:

(a) Is used solely for agricultural purposes including the preparation or harvesting of cotton, alfalfa, grains and other farm crops.

(b) Is only incidentally operated or moved on a highway whether as a trailer or self‑propelled unit. For the purposes of this subdivision, "incidentally operated or moved on a highway" means travel between a farm and another part of the same farm, from one farm to another farm or between a farm and a place of repair, supply or storage.

27. 28. "Limousine" means a motor vehicle providing prearranged ground transportation service for an individual passenger, or a group of passengers, that is arranged in advance or is operated on a regular route or between specified points and includes ground transportation under a contract or agreement for services that includes a fixed rate or time and is provided in a motor vehicle with a seating capacity not exceeding fifteen passengers including the driver.

28. 29. "Livery vehicle" means a motor vehicle that:

(a) Has a seating capacity not exceeding fifteen passengers including the driver.

(b) Provides passenger services for a fare determined by a flat rate or flat hourly rate between geographic zones or within a geographic area.

(d) May do any of the following:

(i) Operate on a regular route or between specified places.

(ii) Offer prearranged ground transportation service as defined in section 28‑141.

(iii) Offer on demand ground transportation service pursuant to a contract with a public airport, licensed business entity or organization.

29. 30. "Local authority" means any county, municipal or other local board or body exercising jurisdiction over highways under the constitution and laws of this state.

30. 31. "Manufacturer" means a person engaged in the business of manufacturing motor vehicles, trailers or semitrailers.

31. 32. "Moped" means a bicycle that is equipped with a helper motor if the vehicle has a maximum piston displacement of fifty cubic centimeters or less, a brake horsepower of one and one‑half or less and a maximum speed of twenty‑five miles per hour or less on a flat surface with less than a one ~~per cent~~ percent grade.

32. 33. "Motor driven cycle" means a motorcycle, including every motor scooter, with a motor that produces not more than five horsepower.

33. 34. "Motor vehicle":

(a) Means either:

(i) A self‑propelled vehicle.

(ii) For the purposes of the laws relating to the imposition of a tax on motor vehicle fuel, a vehicle that is operated on the highways of this state and that is propelled by the use of motor vehicle fuel.

(b) Does not include a motorized wheelchair, an electric personal assistive mobility device or a motorized skateboard.� For the purposes of this subdivision:

(i) "Motorized skateboard" means a self‑propelled device that has a motor, a deck on which a person may ride and at least two tandem wheels in contact with the ground.

(ii) "Motorized wheelchair" means a self‑propelled wheelchair that is used by a person for mobility.

34. 35. "Motor vehicle fuel" includes all products that are commonly or commercially known or sold as gasoline, including casinghead gasoline, natural gasoline and all flammable liquids, and that are composed of a mixture of selected hydrocarbons expressly manufactured and blended for the purpose of effectively and efficiently operating internal combustion engines. Motor vehicle fuel does not include inflammable liquids that are specifically manufactured for racing motor vehicles and that are distributed for and used by racing motor vehicles at a racetrack, use fuel as defined in section 28‑5601, aviation fuel, fuel for jet or turbine powered aircraft or the mixture created at the interface of two different substances being transported through a pipeline, commonly known as transmix.

35. 36. "Motorcycle" means a motor vehicle that has a seat or saddle for the use of the rider and that is designed to travel on not more than three wheels in contact with the ground but ~~excluding~~ excludes a tractor and a moped.

36. 37. "Neighborhood electric vehicle" means a self‑propelled electrically powered motor vehicle to which all of the following apply:

(a) The vehicle is emission free.

(b) The vehicle has at least four wheels in contact with the ground.

(c) The vehicle complies with the definition and standards for low speed vehicles set forth in federal motor vehicle safety standard 500 and 49 Code of Federal Regulations sections 571.3(b) and 571.500, respectively.

37. 38. "Nonresident" means a person who is not a resident of this state as defined in section 28‑2001.

38. 39. "Off‑road recreational motor vehicle" means a motor vehicle that is designed primarily for recreational nonhighway all‑terrain travel and that is not operated on a public highway. Off‑road recreational motor vehicle does not mean a motor vehicle used for construction, building trade, mining or agricultural purposes.

39. 40. "Operator" means a person who drives a motor vehicle on a highway, who is in actual physical control of a motor vehicle on a highway or who is exercising control over or steering a vehicle being towed by a motor vehicle.

40. 41. "Owner" means:

(a) A person who holds the legal title of a vehicle.

(b) If a vehicle is the subject of an agreement for the conditional sale or lease with the right of purchase on performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee, the conditional vendee or lessee.

41. 42. "Pedestrian" means any person afoot. A person who uses an electric personal assistive mobility device or a manual or motorized wheelchair is considered a pedestrian unless the manual wheelchair qualifies as a bicycle. For the purposes of this paragraph, "motorized wheelchair" means a self‑propelled wheelchair that is used by a person for mobility.

42. 43. "Power sweeper" means an implement, with or without motive power, that is only incidentally operated or moved on a street or highway and that is designed for the removal of debris, dirt, gravel, litter or sand whether by broom, vacuum or regenerative air system from asphaltic concrete or cement concrete surfaces, including parking lots, highways, streets and warehouses, and a vehicle on which the implement is permanently mounted.

43. 44. "Public transit" means the transportation of passengers on scheduled routes by means of a conveyance on an individual passenger fare‑paying basis excluding transportation by a ~~sight‑seeing~~ sightseeing bus, school bus or taxi or a vehicle not operated on a scheduled route basis.

44. 45. "Reconstructed vehicle" means a vehicle that has been assembled or constructed largely by means of essential parts, new or used, derived from vehicles or makes of vehicles of various names, models and types or that, if originally otherwise constructed, has been materially altered by the removal of essential parts or by the addition or substitution of essential parts, new or used, derived from other vehicles or makes of vehicles. For the purposes of this paragraph, "essential parts" means integral and body parts, the removal, alteration or substitution of which will tend to conceal the identity or substantially alter the appearance of the vehicle.

45. 46. "Residence district" means the territory contiguous to and including a highway not comprising a business district if the property on the highway for a distance of three hundred feet or more is in the main improved with residences or residences and buildings in use for business.

46. 47. "Right‑of‑way" when used within the context of the regulation of the movement of traffic on a highway means the privilege of the immediate use of the highway. Right‑of‑way when used within the context of the real property on which transportation facilities and appurtenances to the facilities are constructed or maintained means the lands or interest in lands within the right‑of‑way boundaries.

47. 48. "School bus" means a motor vehicle that is designed for carrying more than ten passengers and that is either:

(a) Owned by any public or governmental agency or other institution and operated for the transportation of children to or from home or school on a regularly scheduled basis.

(b) Privately owned and operated for compensation for the transportation of children to or from home or school on a regularly scheduled basis.

48. 49. "Semitrailer" means a vehicle that is with or without motive power, other than a pole trailer, that is designed for carrying persons or property and for being drawn by a motor vehicle and that is constructed so that some part of its weight and that of its load rests on or is carried by another vehicle.� For the purposes of this paragraph, "pole trailer" has the same meaning prescribed in section 28‑601.

49. 50. "State" means a state of the United States and the District of Columbia.

50. 51. "State highway" means a state route or portion of a state route that is accepted and designated by the board as a state highway and that is maintained by the state.

51. 52. "State route" means a right‑of‑way whether actually used as a highway or not that is designated by the board as a location for the construction of a state highway.

52. 53. "Street" or "highway" means the entire width between the boundary lines of every way if a part of the way is open to the use of the public for purposes of vehicular travel.

53. 54. "Taxi" means a motor vehicle that has a seating capacity not exceeding fifteen passengers, including the driver, that is registered as a taxi in this state or any other state, that provides passenger services and that:

(a) Does not primarily operate on a regular route or between specified places.

(b) Offers local transportation for a fare determined on the basis of the distance traveled or prearranged ground transportation service as defined in section 28-141 for a predetermined fare.

54. 55. "Traffic survival school" means a school that offers educational sessions to drivers who are required to attend and successfully complete educational sessions pursuant to this title that are designed to improve the safety and habits of drivers and that are approved by the department.

55. 56. "Trailer" means a vehicle that is with or without motive power, other than a pole trailer, that is designed for carrying persons or property and for being drawn by a motor vehicle and that is constructed so that no part of its weight rests on the towing vehicle.� A semitrailer equipped with an auxiliary front axle commonly known as a dolly is deemed to be a trailer. For the purposes of this paragraph, "pole trailer" has the same meaning prescribed in section 28‑601.

57. "Transportation network company" has the same meaning prescribed in section 41‑2138.

58. "transportation network service" has the same meaning prescribed in section 41‑2138.

59. "Transportation network company vehicle" has the same meaning prescribed in section 41‑2138.

~~56.~~ 60. "Truck" means a motor vehicle designed or used primarily for the carrying of property other than the effects of the driver or passengers and includes a motor vehicle to which has been added a box, a platform or other equipment for such carrying.

~~57.~~ 61. "Truck tractor" means a motor vehicle that is designed and used primarily for drawing other vehicles and that is not constructed to carry a load other than a part of the weight of the vehicle and load drawn.

~~58.~~ 62. "Vehicle" means a device in, on or by which a person or property is or may be transported or drawn on a public highway, excluding devices moved by human power or used exclusively on stationary rails or tracks.

~~59.~~ 63. "Vehicle transporter" means either:

(a) A truck tractor capable of carrying a load and drawing a semitrailer.

(b) A truck tractor with a stinger‑steered fifth wheel capable of carrying a load and drawing a semitrailer or a truck tractor with a dolly mounted fifth wheel that is securely fastened to the truck tractor at two or more points and that is capable of carrying a load and drawing a semitrailer. END_STATUTE

Sec. 3. Section 28-142, Arizona Revised Statutes, is amended to read:

START_STATUTE28-142. Livery vehicle, taxi, transportation network company vehicle, transportation network company and limousine regulation; state preemption

The regulation and use of livery vehicles, taxis, transportation network company vehicles, transportation network companies and limousines are of statewide concern.� Livery vehicles, taxis, transportation network company vehicles and limousines and their use and transportation network companies that are regulated pursuant to this title are not subject to further regulation by a county, city, town or other political subdivision of this state, except that a public airport operator that operates a public airport pursuant to section 28‑8421, 28‑8423 or 28‑8424 or a public body operating a public airport may establish the number of livery vehicles, taxis, transportation network company vehicles, transportation network companies �or limousines that may conduct business at a public airport or may set additional or more restrictive requirements for the conduct of that business at a public airport. END_STATUTE

Sec. 4. Section 28-2164, Arizona Revised Statutes, is amended to read:

START_STATUTE28-2164. Reregistration on becoming liable for weight fee; exceptions

A. On using or offering to use a registered vehicle for transportation of passengers for compensation or on altering or reconstructing it for the transportation of property, whether or not the weight fee has been paid, the owner shall immediately:

1. Surrender to the department the certificate of title and registration card to and the license plate assigned to the vehicle.

2. Apply for a corrected certificate of title.

3. Obtain a new registration, and an additional fee, other than the weight fee, is not required.

B. Subsection A of this section does not apply to transportation network companies, transportation network company drivers or transportation network company vehicles. END_STATUTE

Sec. 5. Section 28-4009, Arizona Revised Statutes, is amended to read:

START_STATUTE28-4009. Motor vehicle liability policy requirements

A. An owner's motor vehicle liability policy shall comply with the following:

1. The policy shall designate by explicit description or by appropriate reference all motor vehicles for which coverage is granted. If coverage is provided for a fleet of seven or more motor vehicles, the maximum payable for any one accident is the limit of liability stated in the policy. There is no accumulation of coverage for each separate vehicle covered.

2. The policy shall insure the person named in the policy as the insured and any other person, as insured, using the motor vehicle or motor vehicles with the express or implied permission of the named insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of the motor vehicle or motor vehicles within the United States or the Dominion of Canada, subject to limits exclusive of interest and costs, for each motor vehicle as follows:

(a) Fifteen thousand dollars because of bodily injury to or death of one person in any one accident.

(b) Subject to the limit for one person, thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident.

3. By agreement in writing between a named insured and the insurer the policy may exclude as insured a person or persons designated by name when operating a motor vehicle. The written agreement between the named insured and insurer is effective for each renewal of the policy by the insurer and remains in effect until the insurer agrees in writing to provide coverage for the person or persons who were previously excluded from coverage.

B. An operator's motor vehicle liability policy shall insure the person named as insured in the policy against loss from the liability imposed on the person by law for damages arising out of the use by the person of a motor vehicle not owned by the person, within the same territorial limits and subject to the same limits of liability provided in subsection A of this section for an owner's motor vehicle liability policy.

C. A motor vehicle liability policy:

1. Shall state the name and address of the named insured, the coverage afforded by the policy, the premium charged for the policy, the complete vehicle identification number of all vehicles covered by the policy, the policy period and the limits of liability.

2. Shall contain an agreement or be endorsed that insurance is provided under the policy in accordance with the coverage defined in this chapter for bodily injury and death or property damage, or both.

3. Is subject to all of the provisions of this chapter.

4. Is not required to insure liability either:

(a) Under any workers' compensation law.

(b) On account of bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured or while engaged in the operation, maintenance or repair of the motor vehicle.

(d) For damage to property or bodily injury caused intentionally by or at the direction of the insured.

(e) From and after February 29, 2016, for a private passenger motor vehicle used while a transportation network company driver is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services unless expressly authorized by the terms of the motor vehicle liability insurance policy or an endorsement or amendment to the policy.

5. Is subject to the following provisions that are not required to be in the policy:

(a) The liability of the insurance carrier with respect to the insurance required by this chapter becomes absolute when injury or damage covered by the motor vehicle liability policy occurs. The policy may not be cancelled or annulled as to that liability by an agreement between the insurance carrier and the insured after the occurrence of the injury or damage, and a statement made by the insured or someone on the insured's behalf or a violation of the policy shall not defeat or void the policy.

(b) The satisfaction by the insured of a judgment for the injury or damage is not a condition precedent to the right or duty of the insurance carrier to make payment on account of the injury or damage.

(c) The insurance carrier may settle any claim covered by the policy, and if the settlement is made in good faith, the amount of the claim is deductible from the limits of liability specified in subsection A, paragraph 2 of this section.

(d) The policy, the written application for the policy, if any, and any rider or endorsement that does not conflict with this chapter constitute the entire contract between the parties.

6. May provide that the insured shall reimburse the insurance carrier for any payment the insurance carrier would not have been obligated to make under the terms of the policy except for this chapter.

7. May provide for the prorating of the insurance under the policy with other valid and collectible insurance.

D. A policy that grants the coverage required for a motor vehicle liability policy may also grant lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy, and the excess or additional coverage is not subject to this chapter. With respect to a policy that grants the excess or additional coverage, the term "motor vehicle liability policy" applies only to that part of the coverage that is required by this section.

E. The requirements for a motor vehicle liability policy may be fulfilled by the policies of one or more insurance carriers that together meet the requirements.

F. A binder issued pending the issuance of a motor vehicle liability policy fulfills the requirements for the policy. END_STATUTE

Sec. 6. Heading change

The article heading of title 28, chapter 9, article 2, Arizona Revised Statutes, is changed from "MOTOR CARRIER FINANCIAL RESPONSIBILITY" to "TRANSPORTATION FINANCIAL RESPONSIBILITY".

Sec. 7. Section 28-4033, Arizona Revised Statutes, is amended to read:

START_STATUTE28-4033. Financial responsibility requirements

A. A person that is subject to the requirements of this article shall maintain motor vehicle combined single limit liability insurance as follows:

1. For the transportation of nonhazardous property:

(a) For a vehicle with a gross vehicle weight of more than twenty‑six thousand pounds, minimum coverage in the amount of seven hundred fifty thousand dollars.

(b) For a vehicle with a gross vehicle weight of twenty thousand one pounds to twenty‑six thousand pounds, minimum coverage in the amount of three hundred thousand dollars.

2. For the transportation of passengers:

(a) In a vehicle with a seating capacity of sixteen passengers or more, minimum coverage in the amount of five million dollars and uninsured motorist coverage in the amount of at least three hundred thousand dollars.

(b) In a vehicle with a seating capacity of less than sixteen passengers including the driver, but more than eight passengers including the driver, minimum coverage in the amount of seven hundred fifty thousand dollars and uninsured motorist coverage in the amount of at least three hundred thousand dollars.

(c) In a vehicle with a seating capacity of not more than eight passengers including the driver, a policy containing one of the following:

(i) Minimum coverage in the amount of three two hundred fifty thousand dollars and uninsured motorist coverage in the amount of at least three two hundred fifty thousand dollars issued by an insurer that holds a valid certificate of authority or that is permitted to transact surplus lines insurance in this state.

(ii) Minimum coverage as prescribed by section 28‑4038 or 28‑4039, as applicable.

3. For the transportation of hazardous materials, hazardous substances or hazardous wastes:

(a) Minimum coverage in the amount of five million dollars for the transportation of:

(i) Hazardous substances, as defined in 49 Code of Federal Regulations part 171, transported in a cargo tank, portable tank or hopper‑type vehicle with capacities in excess of three thousand five hundred water gallons.

(ii) Any quantity of class A or B explosives.

(iii) Any quantity of poison gas (poison A).

(iv) Liquefied compressed gas or compressed gas transported in a cargo tank, portable tank or hopper‑type vehicle with capacities in excess of three thousand five hundred water gallons.

(v) The quantity of radioactive materials that requires specialized handling and transportation controls as indicated in 49 Code of Federal Regulations part 173.

(b) Minimum coverage in the amount of one million dollars for the transportation of the following:

(i) Any quantity of oil listed in 49 Code of Federal Regulations part 172.

(ii) Any quantity of hazardous wastes, hazardous materials or hazardous substances as defined and listed in 49 Code of Federal Regulations part 171 and in 49 Code of Federal Regulations part 172 but not included in subdivision (a) of this paragraph.

B. If a motor vehicle is leased or rented, the lessor shall ensure that the lessee is covered under the lessor's liability insurance as provided by this section or the lessor shall require that the lessee meet the financial responsibility requirements of this section.� In the case of taxis, livery vehicles or limousines, a person who is listed on the department's records as the owner shall comply with the financial responsibility requirements of this article and article 4 of this chapter.

C. If a lessee uses the motor vehicle for a purpose that is required under this section to have a higher amount of financial responsibility than was required of the lessor or renter, the lessee shall maintain the higher financial responsibility requirements of this section.�

D. The uninsured motorist coverage required by this section is not required until June 1, 1987 and may be provided by a self‑insurance program authorized under section 28‑4007.� A person who is under contract with this state or a political subdivision of this state, who operates a motor vehicle owned by this state or a political subdivision of this state and who is included in the self‑insurance program of this state or a political subdivision of this state is exempt from the uninsured motorist requirements of this section. END_STATUTE

Sec. 8. Title 28, chapter 9, article 2, Arizona Revised Statutes, is amended by adding sections 28-4038 and 28‑4039, to read:

START_STATUTE28-4038. Transportation network services; financial responsibility requirements; survey

A. for a transportation network company that requires a transportation network company driver to accept rides that are booked and paid for exclusively through the transportation network company's digital network or software application and during the time in which the transportation network company driver is logged in to the transportation network company's digital network or software application to be a driver, but is not in the act of providing transportation network services, the following insurance coverage shall be maintained:

1. Before March 1, 2016, the transportation network company driver shall maintain a motor vehicle liability insurance policy that meets at least the requirements of section 28-4009.� A transportation network company shall provide motor vehicle liability insurance coverage in the amount of twenty‑five thousand dollars because of bodily injury to or death of one person in any one accident, subject to the limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident and twenty thousand dollars because of injury to or destruction of property of others in any one accident coverage in the event a transportation network company driver's policy excludes coverage according to the policy's terms.

2. From and after February 29, 2016, the transportation network company driver or the transportation network company, or both, shall provide primary motor vehicle liability insurance coverage in the amount of twenty‑five thousand dollars because of bodily injury to or death of one person in any one accident, subject to the limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident and twenty thousand dollars because of injury to or destruction of property of others in any one accident.� Coverage shall be maintained through any of the following:

(a) A private passenger motor vehicle policy maintained by the transportation network company driver that expressly provides liability coverage while the driver is logged in to the transportation network company's digital network or software application to be a driver.

(b) A motor vehicle liability policy maintained by the transportation network company.

B. for a transportation network company that requires a transportation network company driver to accept rides that are booked and paid for exclusively through the transportation network company's digital network or software application and During the time in which the transportation network company driver is providing transportation network services, the transportation network company driver or the transportation network company, or both, shall maintain the following insurance coverages:

1. Primary commercial motor vehicle liability insurance that covers the transportation network company driver's provision of transportation network services in a minimum amount of two hundred fifty thousand dollars per incident.

2. Commercial uninsured motorist coverage in a minimum amount of two hundred fifty thousand dollars per incident.

C. For a transportation network company that does not require a transportation network company driver to accept rides booked and paid for exclusively through a transportation network company's digital network or software application and during the time in which the transportation network company driver is logged in to the transportation network company's digital network or software application to be a driver, either the transportation network company driver or the transportation network company shall maintain the following insurance coverages:

1. During the time in which the driver is available to provide passenger transportation, but has not accepted a ride request and is not in the act of providing passenger transportation, primary commercial motor vehicle liability insurance coverage in the amount of twenty‑five thousand dollars because of bodily injury to or death of any one person in any one accident, subject to the limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident and twenty thousand dollars because of injury to or destruction of property of others in any one accident.

2. After the driver has accepted a ride request through any communication, including a street hail, and during the time in which the driver is providing passenger transportation:

(a) Primary commercial motor vehicle liability insurance in a minimum amount of two hundred fifty thousand dollars per incident.

(b) Commercial Uninsured motorist coverage in a minimum amount of two hundred fifty thousand dollars per incident.

D. From and after February 29, 2016, unless an insurance policy expressly provides coverage or contains an amendment or endorsement that expressly provides coverage, the transportation network company driver's insurance policy and the motor vehicle owner's personal motor vehicle insurance policy shall not be required to provide coverage for the transportation network company vehicle, the transportation network company driver, the motor vehicle owner or any third party while a transportation network company driver is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services.

E. Notwithstanding subsection D of this section, an insurer may offer, for the period during which a transportation network company driver is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services, one of the following:

1. A motor vehicle liability insurance policy expressly providing such coverage.

2. An amendment or endorsement to an existing motor vehicle liability insurance policy specifically providing such coverage.

F. An insurance policy required by this section is deemed to satisfy the financial responsibility requirements for a motor vehicle insurance policy under this title.

G. A transportation network company driver shall carry proof of insurance in the transportation network company vehicle at all times while logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services.� If an accident occurs involving a transportation network company vehicle, the transportation network company driver shall provide proof of insurance to the parties involved in the accident at the time of the accident. The transportation network company driver shall also notify the transportation network company of the accident.

H. In a claims coverage investigation, transportation network companies and any insurer providing coverage as prescribed in this section shall fully cooperate in the exchange of information, including the precise times that a transportation network company driver logged on and off of the transportation network company's digital network or software application in the twenty-four-hour period immediately preceding the accident, and shall disclose to each other a clear description of the coverage, exclusions and limits provided under any insurance policy each party issued or maintained.

I. From and after February 29, 2016, this section and section 28-4009 do not create an obligation for an insurer that issues coverage to which section 20-1631 applies to offer, provide or issue a motor vehicle liability insurance policy or an endorsement or amendment that includes coverage for any liability arising while a transportation network company driver is logged in to the transportation network company's digital network or software application to be a driver or is providing transportation network services.

J. An insurance policy required by this section may be placed with an insurer authorized to transact insurance in this state pursuant to title 20, chapter 2, article 1 or a surplus lines insurer pursuant to title 20, chapter 2, article 5.

K. The department of insurance, as part of its annual survey of insurance companies, may request information from any property and casualty insurer authorized to write private passenger motor vehicle coverage in this state, including information regarding:

1. Whether the insurer offers for purchase a policy or an endorsement or amendment that covers transportation network company drivers while the driver is logged in to a transportation network company's digital network or software application to be a driver or is providing transportation network services.

2. The number of those policies, endorsements or amendments that have been purchased during the reporting period.

3. The number of those policies, endorsements or amendments that have been canceled during the reporting period. END_STATUTE

START_STATUTE28-4039. Taxi, livery vehicle or limousine; financial responsibility

A. motor vehicle liability insurance for a taxi, livery vehicle or limousine may be maintained as follows:

1. During the time in which the taxi, livery vehicle or limousine driver is available to provide passenger transportation, but has not accepted a ride request and is not in the act of providing passenger transportation, primary commercial motor vehicle liability insurance coverage in the amount of twenty‑five thousand dollars because of bodily injury to or death of any one person in any one accident, subject to the limit for one person, fifty thousand dollars because of bodily injury to or death of two or more persons in any one accident and twenty thousand dollars because of injury to or destruction of property of others in any one accident.� This policy may be maintained by either the driver or the company.

2. After the taxi, livery vehicle or limousine driver has accepted a ride request through any communication and during the time in which the taxi, livery vehicle or limousine driver is providing passenger transportation, the taxi, livery vehicle or limousine driver or the taxi, livery vehicle or limousine company shall maintain the following insurance coverage:

(a) Primary commercial motor vehicle liability insurance in a minimum amount of two hundred fifty thousand dollars per incident.

(b) Commercial uninsured motorist coverage in a minimum amount of two hundred fifty thousand dollars per incident.

B. A taxi, livery vehicle or limousine driver shall carry proof of insurance in the vehicle at all times while providing transportation services. If an accident occurs involving a taxi, livery vehicle or limousine, the taxi, livery vehicle or limousine driver shall provide proof of insurance to the parties involved in the accident at the time of the accident.� The taxi, livery vehicle or limousine driver shall also notify the taxi, livery vehicle or limousine company of the accident.

C. In a claims coverage investigation, a taxi, livery vehicle or limousine company and any insurer providing coverage as prescribed in this section shall fully cooperate in the exchange of information and shall disclose to each other a clear description of the coverage, exclusions and limits provided under any insurance policy that each party issued or maintained. END_STATUTE

Sec. 9. Section 41-2052, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2052. Livery vehicle, taxi, transportation network company vehicle, transportation network company and limousine regulation; state preemption; definitions

A. The regulation and use of livery vehicles, taxis, transportation network company vehicles, transportation network companies and limousines are of statewide concern. Livery vehicles, taxis, and limousines and transportation network company vehicles and their use and transportation network companies that are regulated pursuant to this title are not subject to further regulation by a county, city, town or other political subdivision of this state, except that a public airport operator that operates a public airport pursuant to section 28‑8421, 28‑8423 or 28‑8424 or a public body operating a public airport may establish the number of livery vehicles, taxis, transportation network company vehicles, transportation network companies or limousines that may conduct business at a the public airport or may set additional or more restrictive requirements for the conduct of that business at a the public airport.

B. For the purposes of this section, "transportation network company" and "transportation network company vehicle" have the same meanings prescribed in section 41‑2138. END_STATUTE

Sec. 10. Section 41-2097, Arizona Revised Statutes, is amended to read:

START_STATUTE41-2097. Livery vehicles, taxis and limousines; criminal background checks; vehicle safety records; zero‑tolerance policy; drug and alcohol use by driver

A. An owner of a livery vehicle, taxi or limousine licensed through the department shall have available for inspection at all times by the department written evidence of a criminal background check and drug testing records conducted of for any driver operating a livery vehicle, taxi or limousine for the owner, whether as an employee or lessee.� The criminal background check and preemployment drug testing shall be completed before the driver is engaged as an employee or lessee, and random drug testing shall be completed annually for the driver, whether as an employee or lessee. Drug testing records shall include preemployment drug testing results and random annual drug testing results for the driver, whether as an employee or lessee.

B. An owner of a livery vehicle, taxi or limousine licensed through the department shall have available for inspection at all times by the department all vehicle maintenance records of all the owner's livery vehicles, taxis or limousines.� At a minimum, the vehicle maintenance records shall include information of a routine brake and tire inspection that is performed by a qualified or professional motor vehicle mechanic. Such maintenance records shall be updated at least annually. require that all of the owner's taxis, livery vehicles or limousines used to provide passenger transportation meet state vehicle safety and emissions standards for private vehicles and shall require the taxis, livery vehicles or limousines to have, at a minimum, an annual brake and tire inspection that is performed by a qualified party. The owner shall maintain vehicle safety and emissions inspection records for at least two years and make the records available to the department on request.

C. An owner of a taxi, livery vehicle or limousine shall implement a zero-tolerance policy on the use of drugs and alcohol while a taxi, livery vehicle or limousine driver is providing passenger transportation or is available to provide passenger transportation.� The owner of a taxi, livery vehicle or limousine shall provide notice of this policy on its website or in the taxi, livery vehicle or limousine, including procedures to file a complaint about a driver with whom a passenger was matched and who the passenger reasonably suspects was under the influence of drugs or alcohol during the course of the passenger transportation.

D. On receipt of a passenger complaint alleging a violation of the zero-tolerance policy, the owner of the taxi, livery vehicle or limousine shall do both of the following:

1. Immediately suspend the taxi, livery vehicle or limousine driver's access to the owner's taxi, livery vehicle or limousine.

2. Conduct an investigation into the filed complaint.� The suspension shall last the duration of the investigation.

E. If the taxi, livery vehicle or limousine owner's investigation confirms that the driver has violated the policy required by subsection C of this section, the owner shall permanently prohibit the driver's access to the owner's taxi, livery vehicle or limousine.� The owner of a taxi, livery vehicle or limousine shall maintain enforcement records for at least two years after the date a passenger complaint is received by the owner and make the records available to the department on request. END_STATUTE

Sec. 11. Title 41, chapter 15, Arizona Revised Statutes, is amended by adding article 8, to read:

ARTICLE 8. TRANSPORTATION NETWORK COMPANIES

START_STATUTE41-2138. Definitions

In this article, unless the context otherwise requires:

1. "Digital network or software application" means any online‑enabled application, software, website or system that is offered or used by a transportation network company and that enables a potential passenger to arrange a ride with a transportation network company driver.

2. "Limousine" means a motor vehicle providing prearranged ground transportation service for an individual passenger, or a group of passengers, that is arranged in advance or is operated on a regular route or between specified points and includes ground transportation under a contract or agreement for services that includes a fixed rate or time and is provided in a motor vehicle with a seating capacity not exceeding fifteen passengers, including the driver.

3. "Livery vehicle" means a motor vehicle that:

(a) Has a seating capacity not exceeding fifteen passengers, including the driver.

(b) Provides passenger services for a fare determined by a flat rate or flat hourly rate between geographic zones or within a geographic area.

(d) May do any of the following:

(i) Operate on a regular route or between specified places.

(ii) Offer prearranged ground transportation service as defined in section 28‑141.

(iii) Offer on demand ground transportation service pursuant to a contract with a public airport, licensed business entity or organization.

4. "Person" means both the plural and the singular, as the case demands, and includes individuals, partnerships, corporations, companies, societies and associations.

5. "Taxi" means a motor vehicle that has a seating capacity not exceeding fifteen passengers, including the driver, that is registered as a taxi in this state or any other state, that provides passenger services and that:

(a) Does not primarily operate on a regular route or between specified places.

(b) Offers local transportation for a fare determined on the basis of the distance traveled or prearranged ground transportation service as defined in section 28‑141 for a predetermined fare.

6. "Trade dress" means a removable and distinct logo, insignia or emblem attached to or visible from the exterior of a transportation network company vehicle during the performance of transportation network services.

7. "Transportation network company" means an entity that has been issued a permit pursuant to this article, that operates in this state, that uses a digital network or software application to connect passengers to transportation network services provided by transportation network company drivers and that may but is not deemed to own, operate or control a personal motor vehicle of a transportation network company driver.� Transportation network company does not include the following:

(a) This state or a county, city, town or political subdivision of this state and any related entity, a nonprofit agency or any other public body that coordinates, operates, promotes or sponsors public transportation, carpool or vanpool services.

(b) A program that is in place to meet federal air quality standards pursuant to section 49-404.

(c) Any individual, company or activity that meets the requirements of a rental car agent or rental company as defined in section 20-331 if all of the following apply:

(i) Transportation is provided to another person or is arranged by the rental company but provided by another person.

(ii) The route is predetermined.

(iii) Any money exchanged between the provider of the transportation and the recipient does not exceed the cost of providing the transportation.

8. "Transportation network company driver" means an individual who receives connections to potential passengers and related services from a transportation network company in exchange for payment of a fee to the transportation network company and who operates a motor vehicle that is both of the following:

(a) Owned, leased or otherwise authorized for use by the individual.

(b) Used to provide transportation network services.

9. "Transportation network company vehicle" means a motor vehicle that meets all of the following:

(a) Has a seating capacity not exceeding eight passengers, including the driver.

(b) Is authorized by a transportation network company.

10. "Transportation network services" means the transportation of a passenger between points chosen by the passenger and arranged with a transportation network company driver through the use of a transportation network company's digital network or software application beginning when a transportation network company driver accepts a request for transportation network services received through the transportation network company's digital network or software application, continuing while the transportation network company driver provides transportation network services in a transportation network company vehicle and ending when the passenger exits the transportation network company vehicle or when the trip is canceled. END_STATUTE

START_STATUTE41-2139. Transportation network companies; permit; fee; agent; trade dress

A. A person may not act as a transportation network company driver in this state unless the transportation network company has been issued a permit by the department. The person may apply to the department on forms prescribed by the department. The department shall charge and collect an application fee as determined by the director.

B. The department shall issue a permit to an applicant that meets the requirements of this article.

C. A transportation network company shall maintain an agent for service of process in this state.

D. A transportation network company vehicle shall display trade dress while being used to provide transportation network services.� The trade dress shall identify the transportation network company vehicle with a particular transportation network company. The transportation network company shall file an illustration of the trade dress with the department.

E. A transportation network company shall be regulated pursuant to this article and not as a taxi, livery vehicle or limousine service. END_STATUTE

START_STATUTE41-2139.01. Transportation network services; fares; driver identification; electronic receipt

A. On behalf of a transportation network company driver, a transportation network company may charge a fare for transportation network services provided to passengers. If a fare is charged through a digital network or software application, the transportation network company shall disclose to passengers the fare calculation method on its website or within the digital network or software application.

B. The transportation network company shall provide passengers with the applicable rates being charged through a digital network or software application and the option to receive an estimated fare before the passenger enters the transportation network company vehicle.

C. Before the passenger enters the transportation network company vehicle through the transportation network company's digital network or software application, the digital network or software application shall display a picture of the transportation network company driver and the license plate number of the motor vehicle used for providing the transportation network service.

D. Within a reasonable period of time following the completion of a trip arranged through a digital network or software application, the transportation network company shall transmit to the passenger an electronic receipt that lists all of the following:

1. The origin and destination of the trip.

2. The total time and distance of the trip.

3. An itemization of the total fare paid, if any. END_STATUTE

START_STATUTE41-2139.02. Zero-tolerance policy; drug and alcohol use by driver

A. A transportation network company shall implement a zero-tolerance policy on the use of drugs and alcohol while a transportation network company driver is providing transportation network services or is logged in to the digital network or software application but is not providing transportation network services.� The transportation network company shall provide notice of this policy on its website, including procedures to file a complaint about a transportation network company driver with whom a passenger was matched and who the passenger reasonably suspects was under the influence of drugs or alcohol during the course of the trip.

B. On receipt of a passenger complaint alleging a violation of the zero-tolerance policy, the transportation network company shall do both of the following:

1. Immediately suspend the transportation network company driver's access to the transportation network company's digital network or software application.

2. Conduct an investigation into the filed complaint.� The suspension shall last the duration of the investigation.

C. If the transportation network company's investigation confirms that the transportation network company driver has violated this section, the transportation network company shall permanently deactivate the driver's access to the transportation network company's digital network or software application. The transportation network company shall maintain enforcement records for at least two years after the date a passenger complaint is received by the transportation network company and make the records available to the department on request. END_STATUTE

START_STATUTE41-2139.03. Transportation network company driver; requirements

A. Before a person may accept trip requests through a digital network or software application, the transportation network company shall do all of the following:

1. Require the person to submit an application to the transportation network company that includes the person's name, address, age, driver license number, driving history, motor vehicle registration, motor vehicle insurance information and any other information requested by the transportation network company.

2. Conduct, or have a third party conduct, a local and national criminal background check for each applicant that includes a search of a multijurisdiction criminal records locator or similar, validated commercial nationwide database and a national sex offender registry database.

3. Obtain and review a driving history report for the applicant.

4. Require that all transportation network company vehicles used by transportation network company drivers meet state vehicle safety and emissions standards for private vehicles and have at a minimum an annual brake and tire inspection that is performed by a qualified third party.

B. A transportation network company may not allow a person to act as a transportation network company driver who:

1. Has had more than three moving violations or one major violation pursuant to title 28 in the preceding three years.� For the purposes of this paragraph, "major violation" includes attempting to evade the police, reckless driving or driving on a suspended or revoked license.�

2. Has been convicted within the preceding seven years of violation of section 13‑706, 28‑1381, 28‑1382 or 28‑1383 or title 13, chapter 14, 19, 22, 23, 34 or 35.1.

3. Is listed in a national sex offender registry database.

4. Does not possess a valid driver license.

5. Does not possess proof of registration for the motor vehicle that will be used as a transportation network company vehicle.

6. Does not possess proof of financial responsibility for the motor vehicle that will be used as a transportation network company vehicle.

7. Is not at least nineteen years of age.

C. A transportation network company or its agent shall maintain records of the criminal background check conducted on behalf of each transportation network company driver and make the records available to the department on request. END_STATUTE

START_STATUTE41-2139.04. Transportation network services; civil penalty; street hails prohibited; records

A. A transportation network company driver shall accept rides booked and paid for exclusively through a transportation network company's digital network or software application.� The department may impose a civil penalty of not more than one thousand five hundred dollars per violation against any transportation network company driver WHO IS found to be soliciting or accepting street hails.

B. Subsection A of this section does not apply to a transportation network company driver of a transportation network company vehicle insured pursuant to section 28-4038, subsection C.

C. A transportation network company shall maintain individual trip records for at least one year after the date each trip was provided and transportation network company driver records until the one‑year anniversary of the date of the driver's activation on the transportation network company's digital network or software application has ended and shall make the records available to the department on request. END_STATUTE

START_STATUTE41-2139.05. Transportation network companies; drivers; transaction privilege tax prohibited

A transportation network company that has a permit issued pursuant to this article and a transportation network company driver may not be required to pay transaction privilege tax or any similar tax imposed by any taxing authority in this state on transactions in which a transportation network company driver is providing transportation network services. END_STATUTE

START_STATUTE41‑2139.06. Transportation network company disclosures; insurance proceeds

A. A transportation network company shall disclose to its transportation network company drivers, in writing or in an electronic format, the following information before the drivers may accept a request for transportation network services on the transportation network company's digital network or software application:

1. The insurance coverage and limits of liability that the transportation network company provides while the transportation network company driver uses a transportation network company vehicle in connection with the transportation network company's digital network or software application.

2. That the transportation network company driver's own insurance policy might not provide coverage while the transportation network company driver uses a transportation network company vehicle in connection with the transportation network company's digital network or software application, depending on its terms.

3. That the transportation network company driver's use of a vehicle that has a lien against it to provide transportation network services for the transportation network company might violate the terms of the transportation network company driver's contract with the driver's lienholder.

B. The disclosures required by subsection A of this section shall be placed in the prospective transportation network company vehicle owner's written terms of service.

C. If a transportation network company's insurer makes a payment for a claim covered under comprehensive coverage or collision coverage, the transportation network company shall cause its insurer to issue the payment directly to the business repairing the vehicle or jointly to the owner of the vehicle and the primary lienholder on the covered vehicle. END_STATUTE

Sec. 12. Section 42-5062, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5062. Transporting classification

A. The transporting classification is comprised of the business of transporting for hire persons, freight or property by motor vehicle, railroads or aircraft from one point to another point in this state. The transporting classification does not include:

1. Transporting for hire persons, freight or property by motor carriers subject to a fee prescribed in title 28, chapter 16, article 4 or by light motor vehicles subject to a fee under title 28, chapter 15, article 4, transportation network companies subject to a fee prescribed by section 41‑2139 or transportation network company drivers on transactions involving transportation network services as defined in section 41‑2138.

2. The business of transporting for hire persons traveling in air commerce by aircraft if taxation of the business is preempted by federal law.

3. Ambulances or ambulance services provided under title 48 or certified pursuant to title 36, chapter 21.1 or provided by a city or town in a county with a population of less than one hundred fifty thousand persons as determined in the most recent United States decennial census.

4. Public transportation program services for the dial-a-ride programs and special needs transportation services.

5. Transporting freight or property for hire by a railroad operating exclusively in this state if the transportation comprises a portion of a single shipment of freight or property, involving more than one railroad, either from a point in this state to a point outside this state or from a point outside this state to a point in this state. For the purposes of this paragraph, "a single shipment" means the transportation that begins at the point at which one of the railroads first takes possession of the freight or property and continues until the point at which one of the railroads relinquishes possession of the freight or property to a party other than one of the railroads.

6. Arranging transportation as a convenience or service to a person's customers if that person is not otherwise engaged in the business of transporting persons, freight or property for hire.� This exception does not apply to businesses that dispatch vehicles pursuant to customer orders and send the billings and receive the payments associated with that activity, including when the transportation is performed by third-party independent contractors. For the purposes of this paragraph, "arranging" includes billing for or collecting transportation charges from a person's customers on behalf of the persons providing the transportation.

B. The tax base for the transporting classification is the gross proceeds of sales or gross income derived from the business, except that the following shall be deducted from the tax base:

1. The gross proceeds of sales or gross income derived from transporting for hire persons, freight or property by a railroad pursuant to a contract with another railroad that is also considered to be engaged in the businesses of transporting persons, freight or property for hire if the other railroad is liable for the tax on gross proceeds of sales or gross income attributable to the transportation.

2. The gross proceeds of sales or gross income derived from business activity that is properly included in any other business classification under this article and that is taxable to the person engaged in that classification, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

3. The gross proceeds of sales or gross income derived from a business activity that is arranged by the person who is subject to tax under this section and that is not taxable to the person conducting the activity due to an exclusion, exemption or deduction under this section or section 42‑5073, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

4. The gross proceeds of sales or gross income derived from business activity that is arranged by a person who is subject to tax under this section and that is taxable to another person under this section who conducts the activity, but the gross proceeds of sales or gross income to be deducted shall not exceed the consideration paid to the person conducting the activity.

5. The gross proceeds of sales or gross income derived from transporting fertilizer by a railroad from a point in this state to another point in this state. END_STATUTE

Sec. 13. Legislative intent; department of insurance

It is the intent of the legislature that the department of insurance immediately expedite review of any application for approval of a motor vehicle insurance product providing coverage for a transportation network company as defined in section 41-2138, Arizona Revised Statutes, or a transportation network company driver as defined in section 41-2138, Arizona Revised Statutes, who is engaged in providing transportation network services as defined in section 41-2138, Arizona Revised Statutes, and that at least two of these products be available for purchase on or before March 1, 2016.

Sec. 14. Exemption from rulemaking

For the purposes of this act, the department of weights and measures or the department of transportation, as applicable, is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, until March 1, 2016.

Sec. 15. Statutory revision; legislative council

If the department of transportation succeeds to the authority, powers, duties and responsibility of the department of weights and measures relating to the regulation of taxis, livery vehicles and limousines, the legislative council staff shall transfer and renumber title 41, chapter 15, article 8, Arizona Revised Statutes, for placement in title 28, Arizona Revised Statutes, as applicable.