As electric scooters hit the streets, concerns over safe scooting and consumer liability may open the door for scooter-specific insurance.
Companies like Lime and Bird have been rapidly deploying electric scooters across towns and cities with an app-based fee program that allows users to gain access with the push of a button on their mobile phone. Riders are typically charged a small fee such as $1 to unlock the scooter, and then are charged a small amount for every minute the scooter is in use.
Electric scooters have received more press attention in recent months, and several U.S. insurance agencies and advisory departments responded by issuing warnings pointing out that for most rental agreements, consumers are liable for mishaps. Users simply tap and agree to a terms and conditions form, which could be 20 to 30 pages long and basically holds the company harmless for any liability or injury, said Lucian McMahon, senior research specialist at the Insurance Information Institute.
Electric scooter risk falls mostly to consumers
People ride Lime and Bird scooters along the strand in Santa Monica, Calif. in July 2018.
There is uncertainty about how many injuries are being sustained as a result of electric scooters, but it is clear that in some places consumers are being hurt. Some hospitals in California have noticed a spike in emergency room visits due to scooter incidents, and health officials in San Francisco have begun efforts to collect data on hospital injuries related to the two-wheeled machine.
A class action lawsuit has also been filed in Los Angeles by plaintiffs who have all sustained injury to their person or property as a result of scooter accidents. Some underwent surgery and stitches. In one case, Borgia, et. al. v. Bird Rides, Inc. et. al, the plaintiff alleges that the scooter companies are endangering the "health, safety and welfare of the riders, pedestrians and general public," and claims the "seriousness of the harm ... outweighs the social utility of the conduct of the Scooter Defendants."
As things currently stand, liability for such accidents or property damage falls almost exclusively on the user in most jurisdictions.
McMahon said standard homeowners, renters and auto policies typically exclude vehicles with fewer than four wheels such as motorcycles because those would be addressed under motorcycle insurance. It is unlikely that motorcycle insurance could cover electric scooters, he said.
"If you hurt someone else using the e-scooter, you're probably not covered unless you have what's called a personal umbrella policy, which is basically coverage in excess of the homeowners policy," McMahon said. The policy is an optional coverage, and not everyone has it, he added.
For example, a spokesperson from Allstate Corp. said that although the company follows new trends such as rental electric scooters, this mode of transportation does not currently fall under a traditional auto, motorcycle or home policy. Allstate does offer a personal umbrella policy that would provide protection "over and above" standard insurance policies, the spokesperson noted.
The future of electric scooter liability coverage
Industry experts see a number of possibilities for the evolution of electric scooter liability coverage.
Bob Passmore, assistant vice president of personal lines policy at the Property Casualty Insurers Association of America, said it is "definitely possible" that insurance companies could create a specific coverage for electric scooters, similar to what has already been done for ride-sharing programs.
"If it becomes more and more popular, I guarantee somebody will step in and start providing some coverage," Passmore said. "That's exactly what happened once the insurance rules got clarified with Uber and Lyft. Now there's dozens of companies that provide coverage when you're driving for Uber."
"On-demand" insurance could be another way to solve the coverage gap.
"There are so many companies out there that are looking at that on-demand insurance," a spokesperson from the National Association of Insurance Commissioners said. "Some of the big insurers don't move into that as quickly. It's more of the startups that would."
Carriers may also change their policies or underwriting practices to respond to the exposure, Insurance Information Institute's McMahon said.
And lawmakers could also shape the coverage discussion. San Francisco, for example, recently introduced a licensing requirement that mandates scooter companies offer adequate insurance for their riders.
"There's definitely a shift toward the companies being more aware of that issue," McMahon said.