The E-scooter: Another Insurance Quandary Caused by the “Sharing Economy”

Written by Gary Reinhardt, Esq.

We discussed coverage concerns associated with sharing homes and cars.  An even bigger headache may be the e-scooter.  They are everywhere, usually in your way.  E-scooters fly along sidewalks and on the roads and end up scattered about town, usually where you want to walk or park.  Often they dodge around you as you walk or drive, or you dodge them.  Accidents are inevitable.  As the latest and greatest trend for commuters and those that just do not want to walk clutters the landscape of cities and college campuses, a significant problem exists that not many people seemed to have thought about:  does the operator of the e-scooter have liability coverage in the event of an accident?

In rental situations, many assume that the rental itself will provide coverage, meaning Bird, Lime or Bolt or one of the rental companies provides insurance to the operator.  This does not appear to be the case.  For example, the Bird rental agreement is titled “Bird Rental Agreement, Waiver of Liability and Release.”   In large, bold print the agreement warns that “YOUR AUTOMOTIVE INSURANCE POLICIES MAY NOT PROVIDE COVERAGE FOR ACCIDENTS INVOLVING OR DAMAGE TO THIS VEHICLE. TO DETERMINE IF COVERAGE IS PROVIDED, YOU SHOULD CONTACT YOUR AUTOMOTIVE INSURANCE COMPANY OR AGENT.”  Damage to the scooter may be the least of the worries of an operator involved in an accident.

Section 15 of the Bird rental agreement, titled “Releases; Disclaimers; Assumption of Risk”, requires the operator (called the “Rider”) to indemnify and hold harmless Bird for any incident that arises out of the use of the scooter. The agreement emphasizes that “Rider assumes full and complete responsibility for all related risks, dangers, and hazards.”  Nowhere in the agreement does Bird provide liability insurance for the “Rider.”

In order to operate, these e-scooter companies generally need permits.  In the City of Richmond, Virginia, for instance, ordinances govern the e-scooter business, including attempting to limit the size of the scooter fleet and where operators park scooters.  However, when addressing insurance, Richmond required “commercial general liability insurance coverage of at least $3,000,000.00 for each occurrence and at least $5,000,000.00 in the aggregate, listing the City as an additional insured.”  City of Richmond Code §24-128(b)(3).  The ordinance does not require liability insurance covering scooter operation by the “Rider”.

So, the next stop would be an auto policy, assuming the “Rider”/operator has an auto policy.  The Virginia Personal Auto Policy excludes liability coverage “for the ownership, maintenance or use of any vehicle which has fewer than four wheels.”  The operator would not be protected by an auto policy.

Finally, one would check a homeowner’s or renter’s policy.  Once again, you must first hope the operator has access to such a policy.  Even then, exclusions may prevent coverage.  These type of policies routinely exclude coverage “arising out of the ownership, maintenance, use, occupancy, renting, loaning, entrusting, loading or unloading of any motor vehicle or trailer.”  Exceptions to the exclusion in some policies create arguments, particularly if the user argues that the e-scooter is “designed for recreational use off public roads,” and the scooter is not owned by the insured.

On the other hand, suppose your insured is the one injured by an e-scooter.  Assuming that the Rider/operator has no insurance, can your insured then seek uninsured motorist coverage?  The Virginia UM endorsement defines, for purposes of UM coverage, an “uninsured motor vehicle” as “a land motor vehicle or trailer of any type.”  In fact, an e-scooter accident could also lead to underinsured coverage because of the broad nature of this definition.  Virginia Federal Courts already found in favor of UIM coverage following an ATV accident so an e-scooter is not much of a stretch (See Porter v. Buck, 137 F.Supp.3d 890 (W.D. Va.  2015).

Add e-scooters to the list of headache-inducing schemes caused by this 21st economy.  Insurers and legislators need to get together to find a way to deal with how to protect both the public and the operator as accidents begin to result in a multitude of denied claims.

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