In cities across the country, electric scooter sharing is scaling. Lime, for example, just launched in Chicago and offers riders an affordable way to move throughout the city. This adds a mobility layer on top of the electric bike share programs that many US cities have already adopted.
But what insurance liabilities do these programs create? If someone in San Francisco were careening down a hill on their electric scooter rental and hit a parked car, how does that get settled?
We’ll explore those thorny questions in this post and explain what independent agents in these cities need to know to confidently talk to both riders and businesses working in those industries about policy options.
Shared Micromobility Trends
The National Association of City Transportation Officials uses “shared micromobility” as an umbrella term to define all shared-use fleets of bikes, e-bikes, scooters and e-scooters, whether station-based or dockless. According to recent data, people took 84 million trips on shared bikes and scooters in 2018, up dramatically from 35 million the year before.
This proves that people are becoming receptive to this form of transportation. And while electric scooter and bike share programs initially began in larger cities like New York, LA and San Francisco, they are gradually expanding to smaller markets.
Not only does it offer affordable transportation at $2.50 for an average dockless e-bike trip and $3.50 for an e-scooter, many experts believe it could help improve two major problems — traffic congestion and pollution.
“Megacities worldwide are facing an epidemic of congestion and pollution caused by rapid urbanization that is increasing gridlock and putting severe pressure on public transportation systems,” writes Adeyemi Ajao, cofounder and managing partner of early-stage venture investing firm Base10 Partners. “46% of car traffic in the US is caused by cars on trips less than three miles and micro-mobility solutions could help alleviate a significant portion of this last-mile gridlock.”
The point here is that electric scooter and bike sharing will continue to grow in popularity, and is something many independent agents will encounter, even in smaller markets.
As you might imagine, this new form of shared transportation has created some concerns from a safety and insurance standpoint. Business journalist, Ed Leefeldt says electric scooters, which are capable of going 15 mph, are often driven on sidewalks and can lead to dangerous accidents with pedestrians and other e-scooters.
Investigative reporter Ryan Felton writes that at least 1,500 riders have been injured since late 2017, and eight people have actually died. This illustrates the very real danger that travel by e-scooter presents.
To make matters worse, the rules surrounding micromobility are lax, especially when it comes to e-scooters. There’s no formal instruction on how to correctly ride one and no safety inspection to ensure it’s in proper working condition. Beyond that, there’s nothing to stop young children from riding electric scooters, critics say. The only training resource first-time riders have access to is whatever they can find on a website.
When it comes to covering riders, it can be a little tricky. Most auto insurance policies won’t cover bikes or scooters because they have less than four wheels, says Loretta Worters, spokesperson and vice president for the Insurance Information Institute.
Energy and transportation writer Cathy Bussewitz notes that while homeowners or renters insurance will usually cover an accident that occurs on a traditional bicycle, it won’t cover one that happens on an e-bike or e-scooter. Therefore, it’s a good idea for regular riders to purchase insurance to cover their specific needs.
When it comes to electric scooters, the National Association of Insurance Commissioners says scooter insurance covers three main areas:
- Collision. Pays for damages resulting from a collision with another scooter, vehicle, etc.
- Liability. Protects riders against damage they do to others or their property while riding a scooter.
- Medical. Covers any medical expenses stemming from an accident.
But because laws, regulations and requirements can vary from state to state, the NAIC recommends checking with your state insurance department to determine exactly what’s required in your area. You can find that information here.
In addition to obtaining scooter insurance, Worters suggests that regular riders increase their umbrella coverage to protect themselves against hazards not covered by other policies. This goes beyond the limits of standard auto insurance and scooter insurance and should fill in any insurance gaps to provide regular e-scooter riders with comprehensive protection. Say for instance, a rider hits a pedestrian, which leads to injuries costing $500,000 — an expense that exceeds the coverage limits of most policies. Having an umbrella policy would cover the additional liability costs.
As for electric bike riders using rentals, there are insurance products available that are tailored specifically to this demographic. For example, Balance for Cyclists offers coverage for both long-term and short-term injuries.
Riders who sustain a long-term, life-altering injury can receive up to $150,000 for issues like traumatic brain injury, paralysis and loss of a limb. Riders who experience a less severe, short-term injury can receive up to $24,500 to cover hospitalization costs, emergency care and physical therapy.
Insuring Businesses in the Industry
Bike share companies like Citi Bike and BIKETOWN and scooter share companies like Lime and Bird often release fleets of vehicles into cities. In New York City alone, there were 10,000 Citi Bikes operating in 2017, according to Spin, a company that offers electric scooters.
With thousands of trips taking place every day, this creates some major risk management concerns, and these companies need to make sure they’re fully covered for inevitable accidents and injuries. There are three main types of coverage that micromobility companies need to protect themselves.
1. General Liability
“A general liability policy covers claims against the company for bodily injury or property damage that occur as a result of negligence,” explains insurance broker Founder Shield. “For a company that is responsible for thousands of scooters or bikes on public streets, the exposure is significant.” If, for example, a rider crashes into a pedestrian causing injury, the company’s general liability insurance would cover the claim.
And since riders aren’t required to carry insurance to ride scooters and bikes, 100 percent of the liability falls on the company. That’s why it’s essential to have robust general liability coverage, which should be a minimum of $1 million per occurrence and $2 million aggregate, adds the Founder Shield team.
2. Property Coverage
This will pay for damage to scooters and bikes, and they cars or other vehicles they may crash into. The rental vehicles take a lot of abuse, which translates into plenty of inventory risk. Property coverage accounts for this and ensures providers don’t take a major financial hit when their fleet becomes damaged and needs repair.
3. Cyber Liability
While data security may not be on everyone’s radar when it comes to scooter share and bikeshare, it’s a serious issue that must be addressed. “Since e-vehicles can be reserved directly through mobile apps, sensitive user information is at risk in the event of a potential data breach,” explains the team at Founder Shield. “A breach could mean millions in losses, especially with many states adopting more strict privacy and notification laws.”
With 16.7 million Americans falling victim to identity theft in 2017 — an all time high according to advisory firm Javelin Strategy — cyber liability should by no means be overlooked.
The coverage protects a company from financial loss stemming from a data breach, including first-party coverages sustained by a company directly, notes insurance consultant Marianne Bonner. It also includes third-party coverage for claims against a company by individuals who have been affected because of a cyber incident.
How to Talk to Customers About Their Policy Options
Given that micromobility is still a new concept for many people, it’s up to the independent agent to educate customers on relevant insurance products and guide them in their decision-making. This is something that starts with creating a comprehensive website that includes FAQs and compares different types of relevant coverage, says the team at voice recordings provider Snap Recordings.
It’s also important to have one-on-one discussions to assess their needs and determine how you can offer the best value. And US consumers want that human interaction, with studies showing 82 percent want more, explains marketing professional Ken Wohl. Engaging periodically with your customers can help you gain a competitive edge.
Riders will likely account for the majority of your customers here, so you’ll need to explain that most auto, homeowners and renters insurance policies won’t cover them, and they’ll want to consider scooter insurance as well as umbrella coverage to stay protected.
Businesses within the sharing industry will need far more robust coverage than riders since they’re held liable for injuries sustained by riders and pedestrians, as well as damage to property and any damages that result from a data breach. For these companies, you should explain the importance of general liability, property coverage and cyber liability insurance.
How Agents Can Capitalize on the Micromobility Revolution
Congestion and pollution are major issues that are testing the US transportation system. In fact, Americans lose an average of 97 hours each year because of congestion, according to the INRIX traffic scorecard, at a cost to the economy of some $87 billion.
With 60 percent of all trips being five or less miles in length, micromobility is a trend that’s likely here to stay, says the team at machine intelligence platform CB Insights. As an independent agent, there are plenty of opportunities, especially if you’re operating in one of these markets.
Knowing the types of coverage your customers (both riders and companies working in these industries) need and clearly presenting their options to them should help you capitalize on this emerging trend and increase your book of business.
Images by: halfpoint/©123RF.com, serrnovik/©123RF.com, zinkevych/©123RF.com, unitysphere/©123RF.com