Insurance regulators take up electric scooter liability issues
Electric scooters are a convenient, popular consumer service. They just happen to have a magnitude of potential liability issues.
If you’ve spent any time in a major metropolitan area lately, you’ve probably noticed the streets and sidewalks are riddled with electric scooters.
The technology behind this emerging last-mile transportation option is simple. Users download an app that lets them find, and for a small fee, unlock and use nearby electric scooters. Users then scoot around town at speeds approaching 20 mph, starting and stopping anywhere they want because a dock isn’t required.
Electric scooters are plentiful, useful, affordable and immensely popular. Industry leaders — Bird and Lime — have been closely tracking the numbers of rides their scooters have handled, reporting more than 20 million combined.
Despite the many positives, electric scooters also bring ample risk along for the ride. As municipalities and states across the country consider regulations and laws governing e-scooters, rider safety and ample insurance coverage will be important questions to address.
Scooters: Here to stay
The success of this technology has left little room for doubt that these companies created a convenient, popular consumer service. There is also little doubt that this service, the way it is used, and the corresponding regulations create a magnitude of potential liability issues for scooter customers and insurers.
In one instance, nine people who were injured by e-scooters filed a class-action lawsuit in a Los Angeles court against Bird, Lime and their manufacturers. The lawsuit accuses the startups of gross negligence, claiming the companies dumped thousands of e-scooters on California roads without regard to public safety and well-being.
The injured included riders and pedestrians who say they sustained broken wrists, toes, and fingers, torn ligaments, face lacerations, and damaged teeth. Adding to the adversity, at least three people died in 2018 while riding e-scooters, according to multiple reports.
Liability questions mount
As injuries occur and liability discussions ensue, many will look to the user agreement where operators waive liability coverage by clicking the “I Agree” button under the terms and conditions prior to their first ride.
Furthermore, while helmet use and other safety precautions are encouraged by these companies, there is little opportunity for these companies to ensure compliance.
Riders also are advised to operate scooters on the roads, not sidewalks, oftentimes in heavy traffic areas where there are few protected bike lanes. Assuming users are following these terms and conditions and get into an accident involving an automobile, it isn’t difficult to imagine an enterprising plaintiff attorney attempting to seek coverage under a scooter user’s automobile policy.
It’s also not difficult to imagine a scenario in which a rule-abiding scooter operator causes a driver to swerve into another vehicle. What portion of liability should be assigned to the scooter operator? What if one or both drivers involved in the subsequent collision are uninsured or underinsured? Despite the terms and conditions of scooter use, will Bird and Lime be required to carry insurance to cover users’ actions?
Premises liability is another issue ripe for the battlefield. What about the liability of store owners when an e-scooter is left — without permission — on their properties that connect to a public space? Are scooter operators considered invitees on private roads that connect to public roads? Does Lime or Bird pick up the tab for liability stemming from in-home charging of their property?
The push to regulate
Efforts to answer these questions and establish regulations have begun in many cities. Some officials have taken extreme measures to remove the unsolicited scooters. Scooter launches in municipalities to date have taken a familiar form – the companies place their scooters on city sidewalks overnight without advance notice. These unannounced and unpermitted launches have led to conflicts between city officials and the scooter companies. A litany of U.S. cities temporarily banned operation of the scooters within city limits, and several municipalities have gone so far as to impound the scooters after they were deployed.
After these actions, scooter companies generally begin to negotiate permit systems and corresponding regulations with municipalities.
In 2018, Los Angeles, Columbus, Ohio, and Nashville among other cities reversed temporary bans and now allow Bird and Lime to operate within city limits. These jurisdictions have also taken steps to enact operational rules such as speed limits in Los Angeles, parking restrictions in Columbus, and a prohibition against operating on sidewalks in business districts in Nashville. The regulations go so far as to outline insurance requirements for scooter companies. The rental agreements between these companies and users by and large place liability on the rider, absolving the scooter companies; however, cities such as San Francisco require these companies to have adequate insurance for each of their users.
Insurance leaders step up
While many of the answers to the questions stemming from last-mile transportation will be dependent on the specific language of an insurance policy, several insurance regulatory bodies have stepped up to offer guidance and solutions. In December 2018, NAMIC testified at the National Council of Insurance Legislators’ Annual Meeting, reiterating its support of the emerging technology as well as the need for appropriate liability structures in the scooter space. NAMIC and representatives from Bird and Lime co-hosted a meeting in January to discuss the insurance challenges and how they might be overcome by policy or legislative action. NAMIC is now working through its member-engaged policy development process to find solutions that meet the industry’s needs in any insurance framework that is contemplated by states.
The insurance industry has a history of embracing innovation and emerging technologies. Starting in the 1960s, insurers advocated for safer vehicles by promoting the mandatory use of seatbelts and airbags. More recently, the Insurance Institute for Business and Home Safety, sponsored by the industry, has pushed for safer, stronger building codes through its groundbreaking research on home resilience.
As it has in the past, the industry should continue to embrace emerging technologies, but that embrace and associated participation in the marketplace must continue to prioritize safety.
Erin Collins (ecollins@namic.org) is assistant vice president of State Affairs for the National Association of Mutual Insurance Companies (NAMIC). These opinions are the author’s own.
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