The response to ride-sharing has varied across states. The responses range from proposed nomenclature changes publicized on social media by the Associated Press Stylebook, to stronger oversight aimed at compelling compliance with state laws regarding inspections and other market regulations. A principal legal obstacle in the ride-sharing debate is how vehicle operators for ride-sharing companies are insured and to what extent ride-sharing companies must retain insurance. Commercial insurance can be economically impractical for most drivers working through ride-sharing services, but personal insurance often does not cover commercial activity, which leaves room for both insurance fraud and lack-of-coverage. In Pennsylvania, Progressive Corp. offers a hybrid-type of insurance for Lyft drivers but does not extend the same policy to Uber drivers.

Legislation favoring the legality of ride-sharing has passed in 17 cities and four states. Among this list is Tennessee’s Ridesharing Act, which establishes new insurance mandates for ride-sharing. Among other issues, the law protects ride-sharing companies from liability, as employers, from injuries to passengers or others under state law workers’ compensation laws. In June 2014, Colorado became one of the first states to pass pro-ride-sharing legislation, which addressed the insurance controversy; the bill, SB 14-125, identifies that ride-sharing companies must have insurance to cover accidents and the companies must additionally make riders aware that they are covered under the companies’ liability policy, and provides leniency in assessing fines for noncompliance by the state’s public utilities commission. In California, by contrast, companies are required to insure participating drivers immediately and violation of the bill constitutes a crime. The battle over insurance coverage is just one of many legal challenges faced by ride-sharing companies and the dispute has yet to be resolved in many city and state legislatures. The large ride-sharing companies, such as Uber and Lyft, however, tend to hold enough political sway in some states, such as Illinois, to influence the passage of laws or regulations that would restrict their services.