Why Insurance Companies Shy Away from the Exploding E-Bike Industry
By Scott Chapin
July 2, 2013
The e-bike industry is exploding in the US. While e-bikes are nowhere as popular as they are in Europe, things are quickly changing. Technology keeps improving, and the number of e-bike brands available in the US is expanding rapidly with about 80 e-bike manufacturers in North America. Motors are quieter and more efficient, battery life keeps improving and e-bikes are becoming lighter.
People are “seeing the light” and realizing the “utility-type” e-bike is a fantastic way to commute to work, run errands or just ride for FUN. Yes, e-bike can be really FUN. My first e-bike experience was on a heavy fat bike on snow and I had a blast. It was easy to pedal on the flats and gradual up-hills. The electric assist was wonderful on the steep hills and deeper snow.
Several years ago, when we just started our bike shop insurance program, we did not see a lot of e-bike dealers. Once they were introduced to us however, our insurance program underwriters really needed some lessons on what e-bike were and what the additional risks were, compared to a traditional bicycle. As you can guess, most underwriters thought only one word: MOPED. I had to explain, in great detail, that e-bikes are electric assist bicycles. Many e-bikes are utility type and are heavier and more difficult to pedal uphill, and therefore greatly in need of an assist function. The average e-bike rider isn’t riding one of these because they want to go fast. A road bike with a good rider on board is much faster than an e-bike.
Our team went over the demographics of the e-bike consumer. And although we may not know everything, I think it is safe to say that the “speed demon” uber-athlete types are not your typical e-bike rider. Initially concerned with the assumed high speeds, the underwriters, after a year or two and more education have become more comfortable with the exposure. That said, they still do have some legitimate concerns. For example, a sticking throttle can cause an accident. They have seen claims where the throttle sticks, someone gets injured and there is a lawsuit. Common? No. But still plausible.
Technology improvements with the drive systems seem to be making e-bikes much safer. Some e-bikes (called pedal-assist or pedelecs) only engage power when the rider is pedaling the bike. This is done via a torque sensor. I think this is a great safety improvement, and an underwriter would agree. It takes the “moped” worry out of the equation.
E-bike rentals also pose different risks compared to a traditional bike shop. I see this as a potential issue. Why? Some people are less coordinated than others. Some may be a little overwhelmed on a traditional bicycle, as they may not ride much. Add the element of having to control a throttle and there could easily be an accident.
I remember in high school I had a moped. (Sorry for the moped story.) A friend of mine wanted to ride it. She crashed it within 45 seconds. Why? Because she was trying to stop using the brake, but failed to let off the gas. I know that may seem stupid, but I have told that story many times and several people have seen similar things happen.
There is a great organization called the Light Electric Vehicle Association, which is the leading worldwide light electric vehicle trade and advocacy organization. They recently endorsed our bike shop insurance program. While not every e-bike shop’s exposures will fit in the program, for the ones that fit, the coverages and pricing tend to be better than the alternatives we have seen in the marketplace.
Image used under Creative Commons from Zweirad-Industrie-Verband e.V.