E-bikes gearing up to be costly risk: brokers

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E-bikes gearing up to be costly risk: brokers

Clients should be told of risks, responsibilities.

Terri Goveia on October 12, 2010

They look and act like bikes–and some even mimic the sleek lines of a scooter or mini motorcycle–but the things that set e-bikes apart from those vehicles will cost the industry dearly, say brokers who want the motor-powered bikes regulated and insured.

With more riders heading out on to roadways on electric-powered bikes, the risk for collisions with larger vehicles will also go up–but since the bikes don’t require licenses or insurance, auto insurers face collision and bodily injury claims when they’re involved in an accident, says Normand Haas, president and CEO of IBMG Canada Inc. The Toronto-based broker has already had several auto insurance clients collide with e-bikes, whose riders can zip in and around traffic like a regular bike, but with more speed and power.

Haas says the recent piloting of e-bikes in Ontario–which only determined that riders require a helmet–took an “act now, fix it later” approach. “All those people are test pilots,” he told Canadian Insurance Top Broker October 12. “We’re going to pay the bill for that initiative.”

Shouldering liability

Since e-bikes are categorized as bicycles, if they’re involved in a car accident, their unlicensed status defaults any liability to the auto vehicle. “We’ll always have 100% liability,” Haas says.

He isn’t the only one concerned about the lack of regulation for the bikes, which are seen as a green alternative to gas-powered vehicles, or a faster alternative to a lowly pedal bike.

“It’s a slippery slope,” says Paul Cassells, owner of Cassells Insurance Brokerage in Vancouver, of the rights that e-bike riders have on the road. Cassells, whose business specializes in recreational vehicles, including motorcycles and scooters, worries about the implication of having small, motorized vehicles on the roads without coverage.

“If you hit a car with an e-bike, they can cause thousands of dollars of damage,” he says.

E-bike riders are usually drawn to the vehicles’ low cost, and low hassle. But by spending a little more on a scooter, they can be better protected, Cassells points out. “I would recommend [that they] carry the minimum liability coverage,” he says. A Vespa, which has more power than an e-bike, requires insurance, and in B.C., drivers can get $200,000 in minimum liability through a regular Autoplan policy.

The problem with perception

Most e-bikes are used for commuting, and the government should consider how people are using and how often they’re using them if they revisit the regulatory question, says Gregory Chang, an insurance litigation lawyer with Bougadis Chang Barristers LLP in Toronto.

Part of the problem is perception–riders may equate their e-bike with a regular bicycle and not a scooter, and underestimate danger, he says. “If they intend to be on the roads, they’re putting themselves in the thick of it, I wonder if people are aware of the risk.”

When people buy a scooter, they have to think about risk because they need a licence and insurance, “if you buy an e-bike, you’re not required to think about those things,” he points out.

Brokers can help clients understand the trade-off they’re making for a cheaper product, but that’s if they even find out about an e-bike purchase. (Haas notes the bikes can be purchased “like a bag of chips.”) But they should be warned to move with caution, understand that they’re actually driving a scooter, not a bike, and that they must follow the rules of the road, Haas says.

But only additional regulation and proper coverage will really protect the riders, other drivers and even pedestrians.

“This needs to be addressed. The consequences are huge to the industry,” he says. “People are seeing it, but nobody is reacting.”