According to a 2019 report, 33 states have laws defining electric bicycles. The remaining states categorize them as “motorized bicycles” or mopeds. For insurance purposes, are they bicycles or not?

MERGING TRAFFIC

Bicycles, e-scooters, and e-bicycles combine to create confusion

By Joseph S. Harrington, CPCU

For decades, personal lines insurers and agents, along with the general public, have operated under a common set of understandings about how people are covered for liability as they move about.

Today, those understandings are being disrupted by trends in “micro-mobility”[i]—small vehicles in unexpected places—and insurance agents need to pay attention and speak up if they want a role in shaping revised understandings regarding coverage.

Background

Personal auto insurance is, of course, used to meet financial responsibility requirements for registered motor vehicles, including motorcycles, that require titles and driver’s licenses, and are restricted to use on designated roadways.

There are few, if any, such requirements or restrictions on pedal-powered bicycles. Damage and injury arising from one’s use of a bicycle is almost universally covered under the personal liability section of a homeowners and renters policy (not explicitly, but by virtue of there being no applicable restriction or exclusion)

Over time, there has emerged a range of smaller motorized vehicles, such as off-road all-terrain vehicles (ATVs), not considered to be motor vehicles for licensing purposes, or for use on public roads.

In general, homeowners-type personal liability coverage extends to damage and injury arising from use of such vehicles, owned or non-owned, at the insured location; this approach effectively classifies such use as a homeowners premises exposure.

That personal liability coverage also extends to liability for the use of non-owned vehicles (other than autos) away from the insured premises. The logic here is that such use is still an incidental household exposure, as when a family rents some ATVs on vacation.

A line is drawn, however, at the use of owned vehicles away from the insured premises, which is excluded from liability coverage under standard homeowners and renters forms. The assumption here, in effect, is that such vehicles are being used regularly in public places and need to carry separate vehicle insurance.

E-scooters

That’s where things have stood, more or less. As a reflection of how things are changing, consider what’s transpired in the state of Maryland.

In 2012, the Old Line State started requiring owners of motor scooters and mopeds to purchase vehicle titles and liability insurance for them, as motorcycle owners are required to do.[ii] However, one does not need to have a motorcycle license to operate a motor scooter or moped; a regular driver’s license or a state-issued operating permit will do.

Later, in 2019, the state enacted a law specifying that “low speed” electric scooters were to be considered as bicycles under the state’s vehicle code. Thus, low speed scooters did not have to be titled or insured, and no operating permit is necessary. (In paraphrase, the law defines a low-speed electric scooter as a conveyance weighing less than 100 pounds with handlebars and a platform for the operator to stand on and an electric motor capable of attaining 20 miles per hour.[iii])

This latest Maryland law responds to the growing popularity of rental scooters in urban areas, a trend that has raised concerns about liability for damage or injury to scooter users and pedestrians.

For example, the Chicago Tribune reported that “dozens of people went to local emergency rooms with a variety of scooter-related injuries” during a four-month scooter pilot program in Chicago. The injured included a bicyclist who needed face reconstruction surgery after colliding with a scooter, and a scooter user who shattered his kneecap after hitting a pothole.

In response to the concerns, insurance industry representatives are engaged in discussions with scooter companies, municipalities, and states regarding regulation of scooter use and the allocation of liability for damages and injuries that result.

Context of coverage

Given the size and speed of low-speed scooters as defined, it certainly makes sense not to categorize them with autos and motorcycles. But if they are classified as bicycles, so are mopeds, which are subject to title and insurance requirements in Maryland.

In all, the latest Maryland law classifying low-speed scooters as bicycles is a small measure that raises a bigger question:

If a low-speed scooter, or any other type of powered vehicle, is considered legally equivalent to a bicycle, does that mean homeowners insurers are expected to cover liability for e-scooter accidents, as they do for bicycle accidents?

Insurance professionals may be surprised at the response to that question from the Maryland Insurance Administration (MIA).

“There is no statutory requirement that homeowner’s insurers must cover liability claims involving the insured’s use of an e-scooter, or a bicycle for that matter (emphasis added),” stated Joseph Sviatko, a public affairs officer with the MIA, in an email message. He added that “there is no statute or regulation that would prohibit an insurer from filing a policy form with a liability exclusion related to scooters or bicycles, [but] I do not believe we have seen any filings of this sort.”

In short, understandings about liability coverage for non-auto vehicles arise from insurance industry practice, not legal mandate.

To be sure, any attempt to scale back existing coverage for liability arising from use of non-auto vehicles would run into regulatory resistance. At the very least, an insurer would be expected to show a rate reduction to correspond with a reduction in coverage.

That said, the context for consideration of this topic is changing rapidly, and personal lines agents have an interest in shaping how coverage evolves in response.

We’re not just talking about people pedaling around neighborhood streets or on bicycle paths, or families enjoying a spin in the woods on ATVs. The focus has shifted substantially to the use of bicycles and e-scooters as:

• Regular means of adult transportation;
• That do not conform with designed traffic patterns;
• Operating on public ways in crowded places (including sidewalks, legally or not);
• Where individuals are not shielded from injury by being within a vehicle.

An increase in related claim frequency is almost certain; an increase in severity is also likely.

E-bicycles arrive

If all that isn’t murky enough, carriers and agents have to determine how to respond to the growing popularity of electric bicycles, a hybrid vehicle that supplements traditional “pedal power” with an electric motor that helps riders climb hills and extend their journeys.

According to a 2019 report by the National Conference of State Legislatures, 33 states have laws defining an electric bicycle, and all of them have different laws regarding the operation of them. In the remaining states, electric bicycles might be categorized as “motorized bicycles” or mopeds.[iv]

So, for insurance purposes, are these bicycles or not?

Municipalities are challenged to incorporate the means of “micro-mobility” into traffic patterns originally designed for a simple distinction between motor vehicles and pedestrians.

Insurers and their agents face their own challenge, the challenge of establishing common standards for how liability for damage and injury arising from low and slow vehicles will be covered going forward.

[i] Lime, Helping Communities with Smart Mobility, December 2018, p. 5; accessed at http://ncoil.org/wp-content/uploads/2018/12/NCOIL-Presentation-Lime.pdf

[ii] Kate Alexander, “Maryland to require title and insurance for scooters and mopeds,” Washington Post, Sept. 12, 2012; accessed at https://www.washingtonpost.com/local/maryland-to-require-title-and-insurance-for-scooters-and-mopeds/2012/09/12/

[iii] The text of the bill is available at http://mgaleg.maryland.gov/2019RS/Chapters_noln/CH_227_hb0748e.pdf

[iv] National Conference of State Legislatures, State Electric Bicycle Laws | A Legislative Primer; accessed at http://www.ncsl.org/research/transportation/state-electric-bicycle-laws-a-legislative-primer.aspx