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Bicycle Industry

Bike Rental and Test Ride Liability

How to Protect Yourself and Your Bike Shop

Retail bike shops that rent out bicycles should use waivers to reduce their risk. Image used under Creative Commons from markhogan ( Scott Chapin

December 20, 2016

Bike rentals and test rides are great ways to add revenue or help seal a deal on a bike, but they also deliver added risk to the retail bicycle shop owner. It’s an issue I often get asked about, and there are two primary procedures that should be followed to help protect yourself against litigation: bike safety checklists and liability waivers.

Bike Safety Checklist

Before sending any bicycle out with a customer, youshould do a pre-ride inspection. A pre-inspection ride can help to make sure the bike is ready and safe to rent and a post-ride inspection helps make sure the bicycle was not damaged during the ride or doesn’t need major maintenance. Keeping a simple checklist  on file can be extremely valuable in the event of a lawsuit.

Lawsuits often occur months or years after an accident occurs. The checklist may be your only sound defense in court because you may no longer employ the same mechanic(s) you did when the incident occurred, and, if you do, they may not remember the specifics of that particular incident. 

Liability Waivers & Rental/Test Ride Agreements

When renting a bicycle or offering a test ride, the retailer should make sure they have a properly drafted Release of Liability and rental/test ride agreement. The rental/test ride agreement should provide detailed information about who is responsible for damages to the bicycle as well as requiring the use of a helmet.

According to bike industry attorney Jim Moss, you want to warn riders/renters about the differences in the specific bike being ridden compared to what the person may have been riding or normally rides. Most lawsuits are over brakes. Obviously, if someone is accustomed to clincher brakes and uses hydraulic brakes (for the first time), the potential for a mishap greatly increases. You will also want to include in the release section a product liability warning. About half of the states still cover this. You also want people to understand they are on their own and in charge of the operation of the bike. While on a rental, they are choosing where to go. The same holds true with test rides.

Additionally, the rental/test ride contract should have verbiage that states the customer is financially responsible for all damages to the bike. Obviously, the retailer wants to make sure the bicycle comes back, and in good condition.

To help protect the shop from financial risk, we recommend getting a copy of the customer’s  driver’s license and credit card. You should also contact the credit card company to make sure the card is valid.

The rental/test ride agreement should lay out all the requirements of your credit card company, including things like taking a security deposit and charging the customer for any damages or the non-return of the bike. Customers are usually the winner when there is a dispute over a credit card so make sure your credit card company has given you the language they want to see to win these disputes.

We have seen many bicycle retailers who followed the financial risk management protocol and still get burned by a thief.    

This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.