Uber halted its service in Kansas on Tuesday afternoon after state legislators overrode the governor's veto of a bill regulating on-demand transportation companies.
The San Francisco ride-hailing company said the bill includes a provision that would make operating in the state untenable.
Aside from more stringent background checks, the bill requires Uber drivers who have a lien on their vehicle to carry their own comprehensive collision insurance. Except for Utah, no other state that has legislation for transport network companies has such a provision.
Uber did not specify why the provision was "a poison pill amendment," but requiring drivers to carry more than personal liability insurance could deter drivers from joining the service.
"Overregulation of businesses discourages investment and harms the open and free marketplace," he said in a statement. "Uber, and other innovative businesses, should be encouraged to operate, grow and create jobs here in Kansas."
This is not the first insurance controversy Uber has faced.
In January, the company struck a deal with Metromile Inc., an unusual pay-by-the-mile insurer, to address what critics called a "coverage gap" that could at times leave Uber drivers and passengers, other vehicle occupants and pedestrians unprotected by insurance in an accident. That deal made Metromile policies available to Uber drivers in California, Illinois and Washington state.
In November, Uber stopped operating in Nevada after a court there issued a preliminary injunction saying that the service should have to face the same stringent regulations as taxis and that its drivers should carry more extensive insurance policies. Uber service in Nevada has not resumed.