Homeowners insurance in the age of micromobility
If the past two years are any indication, there could be more e-bike and e-scooter riders than ever.
H.G. Wells once said that when he saw an adult on a bicycle, he “no longer despairs of the human race.”
Imagine what the famous futurist would have felt if he took in a contemporary U.S. street, populated with a growing share of adults whizzing by on motorized bicycles and scooters.
The rise of e-bikes and e-scooters, and motorized bikes and scooters generally, may delight riders who can skip a stop-and-go cab ride in the city or stay active in their later years. But for many homeowners insurance carriers, the growing popularity of these vehicles may present a new wrinkle on the well-established bicycle/recreational vehicle risk exposures of property damage, theft, bodily injury, or injury to a third party.
If these modern mobility vehicles are involved in an accident or cause property damage, riders, in turn, may be unsure whether their homeowners’ policies will respond to those incidents.
E-bikes and e-scooters = e-xceedingly fast
It’s a safe bet that attaching a motor to something will likely make it faster. But just how fast is a matter of design.
For e-bikes, the design generally falls into two categories. The first is pedal-assist bikes, which typically have motors that engage while the rider is actively pedaling, providing a little extra muscle to get riders up hills or through longer journeys. The second, so-called throttle e-bikes, typically have motors that can be activated when the rider isn’t pedaling, allowing them to coast on motor power instead of their own effort.
As of this writing, at least 26 states have adopted a three-tiered classification system that distinguishes e-bikes by whether their motors are activated when a cyclist is actually pedaling and/or the maximum speed the bike has to reach for the motor to stop providing assistance or, in the case of throttle bikes, turn off. Bikes in tier one and two have motors that deactivate when the bike hits 20 miles per hour (mph) — they can go faster, but at that point they’re propelled solely by the rider (or gravity, or both). Bikes in tier three can reach 28 mph before the motor cuts off.
E-scooters, on the other hand, typically don’t need much in the way of rider exertion beyond an initial starting kick, at which point they’re self propelled. Unlike e-bikes, riders often must be standing and e-scooters are typically slower, travelling at around 10-15 mph, though there are models that exceed those speeds.
Liability considerations
Given the speeds these vehicles can reach, the risk of injury to a third party (to say nothing of the rider) can be significant should an accident occur.
Consider that even the first tier of e-bikes hit speeds that are roughly double the average speed of a traditional bike used in a city bike sharing network. Indeed, data suggests that e-bike riders are experiencing a different accident and injury pattern than traditional bike riders. For instance, one study found that e-bike riders were three times more likely to hit a pedestrian than a traditional bike rider. E-biker riders also suffered more internal injuries than traditional bike riders. And there’s evidence to suggest that other road users may underestimate just how fast an e-bike is traveling, resulting in accidents.
E-scooter riders appear accident prone, too. One study suggested that “injuries associated with electric scooter use were common,” outpacing bicycling and pedestrian injuries over the same time frame. E-scooter riders seem more apt to ride on sidewalks, increasing the opportunity for collisions with pedestrians.
Get e-xcited?
As more policyholders get their hands (and feet) onto e-bikes and e-scooters, whether by buying them or renting them for a quick jaunt around town, it’s important for consumers to assess how their current insurance coverages address the risk exposures surrounding these vehicles.
Policyholders may want to know if their e-bikes and e-scooters are covered recreational vehicles in their homeowners policies. Insurers, warily eyeing the injury and collision statistics of e-scooters and e-bikes, may be wondering if this is a non-owned liability exposure they’d prefer to avoid. Insurers who write a significant book of business in areas where e-bikes/e-scooters are increasingly common commuter vehicles, may also want to consider how this exposure fits their risk appetite.
If the past two years are any indication, there could be more riders than ever.
Property considerations
Bike thefts spiked sharply last year in several major cities. While U.S. data on e-bike thefts is sparse, e-bikes in Europe appear to be stolen at three times the rate of traditional bikes.
E-bikes are, on average, $1,000-$2,000 more expensive than your average commuter bicycle. While they’re more expensive, they’re not necessarily harder to steal or damage in an accident, even though some e-bikes do offer theft mitigation devices.
The average cost of an e-scooter is significantly less than an e-bike; some estimates peg the average price around $300. While theft statistics for e-scooters is similarly sparse, e-scooter rental networks have had their share of thefts.
Owned vs. non-owned exposures
E-bikes and e-scooters are an increasingly common option in urban “micromobility” transportation networks, where a user rents a bike/scooter for short trips around a specific locale. (These networks may also include conventional bikes.) Collectively, passengers took over 136 million rides on these vehicles in 2019, a 6% increase from the prior year. As of last count by the United States Department of Transportation, there were nearly 300 such networks running in over 200 cities across the U.S.
For e-scooters in particular, there’s evidence to suggest that users of these services don’t always (or often) follow safety rules: They’re not always wearing helmets, they may ride on sidewalks or outside of designated lanes, or carelessly deposit their ride on the ground when they’re done. What’s more, many e-scooter rental apps make users assume liability as a term of service.
William C. Schlager (William.Schlager@Verisk.com) is director of ISO personal property and farm product development at Verisk. Raul Retian (Raul.Retian@Verisk.com) is senior director of ISO personal lines core products at Verisk.
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