Many Vehicles, Many Uses, Many Questions

This week’s blog post comes to us from friend of the Academy, Joseph S. Harrington. Joe is a prolific writer, observer, and commentator on the insurance industry. This post is based on his recent Academy webinar by the same title. Enjoy!

What do you think when you see a child riding a minibike down the sidewalk with a friend seated behind?

If you’re safety conscious, you may worry if the two riders are not wearing helmets. Other than that, if you’re like most people, you’d think it looks like fun. As a risk and insurance professional, however, you should be concerned because, with or without helmets, what you’re seeing is a risky activity for which there is likely no liability coverage.

What you’re probably witnessing as you watch the minibike go past is an insured under a homeowners’ policy (the child driving the minibike) operating a motorized non-auto vehicle owned by the named insured (his or her parents) away from the insured premises.

Personal lines insurance professionals are aware, or should be, that liability coverage is excluded for use of motorized vehicles away from the insured premises (in addition to the complete exclusion of coverage for registered vehicles designed for public roads).

If our young operator hits a lip in the sidewalk and flips the rider, there could be a catastrophic injury with no auto or homeowners liability coverage for the household that owns the minibike. Owners of minibikes and similar vehicles need to know to buy liability coverage for them. How often do they do so?

Growing array

Clearly, this topic isn’t child’s play, and it’s becoming less so as more and more adults get out of their cars or off their feet to use some other type of vehicle that doesn’t fit the established urban pattern of roadways and sidewalks.

Welcome to the age of “micro-mobility,” where urban planners, environmental activists, and health-conscious adults are looking to ease congestion, reduce emissions, and get active by using small vehicles to get around.

Most readers are familiar with initiatives in major cities to allow commuters to use electric scooters to motor about in downtown areas to run errands or complete the so-called “last mile” of their commutes (from a train, bus, or parking lot to the workplace).

Many readers will be equally aware that a number of municipalities have pulled back on these initiatives, at least those that were experimental, in response to the number of injuries that have resulted, principally to those riding the scooters, but to other pedestrians, as well.

Beyond that, more and more people are cycling to work, with the term “cycling” encompassing all manner of two-wheeled conveyances (short of motorcycles), including human-powered bicycles, motor-enhanced electric bicycles, pedal-enhanced mopeds, and electric motor scooters.

Growing risks

Today, more and more, there are vehicles for almost every purpose, and the number of purposes is growing, as well.

For example, the insurance business has adapted itself to ride-sharing, the use of private autos as part-time livery vehicles organized through “transportation network companies” such as Uber and Lyft. How ready is the industry for ride-sharing on open vehicles, such as motorcycles and motor scooters?

That application is in its infancy in the United States, but growing rapidly overseas, especially in Asia, where a scooter lift provides a way to work through and avoid chronic congestion.

How about “platform delivery services,” such as DoorDash, GrubHub, and their counterparts? Are insurers prepared for the risks of individuals using small vehicles to travel on public road, sidewalks, and private property to deliver items? Are insurers prepared to allocate liability among the owners of the vehicle, the networks that deploy them, and the businesses that utilize them?

In this brave new world of transit innovation, insurers have to rethink the breadth and depth of their exposure to vehicle losses, and adapt coverages accordingly. Until that happens, agents and broker have to make their clients are ever mindful of the risks they may be taking when they take to the road (or the sidewalk, or the park trail) with a shiny new toy that is no toy at all.

Joe presented this material in his Academy of Insurance session with the same title. If you’re an Academy member, you can access the recording here. If not, you can learn more here.

Topics Auto Liability