Switching gears on e-bike insurance coverage: The wheels of the policies keep turning

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June 23, 2022 - Can electric bicycles zoom into auto and home coverage? With gas prices climbing, more people are turning to electric bicycles as alternatives to cars. On Jan. 21, 2022, Bloomberg reported that U.S. consumers purchased more electric bicycles (nearly 790,000) than electric vehicles (652,000) in 2021. ("America's Best-Selling Electric Vehicles Ride on Two Wheels," Bloomberg.com)

Electric bicycles, or e-bikes for short, are bicycles equipped with a motor. The e-bikes' motor is typically battery-powered and assists the rider with pedaling. E-bike motor assisted speeds are usually capped at 20 mph, but certain e-bikes may reach up to 28 mph before the motor assist ceases.

The types of e-bikes vary. Some must be pedaled to activate the motor, and others have throttle-activated motors that propel the bike without pedaling. Some have both.

Unlike motorcycles, e-bikes are like regular bicycles because they can be pedaled and might not be subject to mandatory licensing or insurance. Because they look like regular bikes, cyclists are naturally inclined to ride their e-bikes anywhere they would ride a regular bike, including sidewalks and walkways.

While 20 mph may not seem very fast, an e-bike hitting a pedestrian at 20 mph would impart more force than a professional boxer's punch. This means accidents between e-bikes and pedestrians can cause serious injuries (and serious liabilities).

Although e-bike insurance exists, to put it mildly, not every e-bike owner has an e-bike policy. If you collide with someone while riding an e-bike, or are unlucky enough to be struck by one, what insurance would cover liabilities the collision causes?

Although state-specific vehicle legislation may require motorists to have minimum insurance for motor vehicles, state-mandated coverage might not apply to e-bikes.

For example, Florida Statute section 324.01 defines a "motor vehicle" to not include a "bicycle, electric bicycle, or moped." In the unpublished 2006 Florida Middle District Court case, Geico Gen. Ins. Co. v. Schwinn, the court determined that a dirt bike and ATV were not "motor vehicles" and did not need minimum auto liability insurance.

If we apply that same logic, e-bike owners probably are not required to insure liabilities arising from their e-bikes.

Consider this:

Sally does not have e-bike insurance. Sally nevertheless rides her e-bike on an empty sidewalk. When she turns a corner, Sally runs over a pedestrian she hadn't seen, causing serious injury.

She wonders whether her home or auto policy could cover the pedestrian's medical bills. If not, Sally may be facing serious financial trouble.

Personal lines insurance policies, such as auto and homeowners, cover certain accidents that cause bodily injury. However, depending on their wording, auto and homeowners liability insurance might not cover e-bike collisions.

Auto policy's coverage for four-wheeled vehicles

Sally might look to her auto policy for liability coverage, thinking that a motorized bike is similar to a motor vehicle. Auto insurance typically covers certain auto accidents involving an insured's vehicle. Coverage for e-bike collisions is probably unlikely under auto policies, if the definitions and exclusions restrict coverage to four-wheeled vehicles or owned vehicles the policy lists as insured vehicles.

If Sally's auto policy covers certain damages arising from an "insured vehicle" defined as a four-wheeled vehicle listed on the policy, there would be no coverage for the e-bike. Her two-wheeled e-bike is not listed as a covered vehicle on the auto policy.

Additionally, Sally's auto policy could exclude coverage for accidents involving vehicles with fewer than four wheels. Courts have enforced this type of exclusion to bar liability coverage for two-wheeled vehicles. For example, a 1993 Louisiana appellate case, Gunn v. Automotive Cas. Ins. Co., applied the exclusion for vehicles with fewer than four wheels to preclude coverage for a motorcycle accident.

Homeowners policy's 'motor vehicle exclusion'

In contrast, homeowners insurance typically covers liability for accidents caused by an insured, whether inside or outside the home. Sally may assume that her homeowners policy covers liabilities caused by accidentally striking the pedestrian with her e-bike.

However, a common feature in homeowners policies is an almost universal exclusion for damages arising out of the use of a motor vehicle. Whether Sally's electric bike could be a "motor vehicle" is first determined by how it is defined in the policy.

If Sally's homeowners policy defines a "motor vehicle" to include electric bikes, then her e-bike is an excluded motor vehicle. But if "motor vehicle" means a "motorized vehicle capable of self-propulsion," there might be coverage for the collision. Sally could argue that her e-bike is not fully self-propelled because she must pedal it to activate the motor, so her e-bike does not fall within the "motor vehicle" definition.

In the 1988 9th U.S. Circuit Court of Appeals case out of Hawaii, Allstate Ins. Co. v. Pacheco, the court found that a moped without pedal assist was not a "motorized land vehicle" subject to the homeowners policy's motorized land vehicle exclusion. Because the policy did not define "motorized land vehicle," the court turned to Webster's Dictionary, which defined "motorized" to mean "to equip with motor driven vehicles" or "automobiles" or "to design or adapt … for direct operation esp. by an electric motor …." The court determined it was reasonable for an insured to expect homeowners coverage for his moped, especially if Hawaii statutes declared that "the term 'motor vehicle' does not include 'mopeds'."

If Sally's homeowners policy is silent on the definition of "motor vehicle," state specific laws defining "motor vehicle" for various purposes may determine whether the motor vehicle exclusion will apply.

Given the rise of e-bike popularity, many states have their own legislative definition of "electric bicycle."

States such as Arkansas, Indiana, Mississippi, Vermont and others have statutes saying that an electric bicycle is not a motor vehicle, at least for registration and licensing purposes. Could these statutes support an argument against applying a homeowners policy's motor vehicle exclusion? Unless the policy definition includes e-bikes, they might.

Liability coverage for the pedestrian's injuries probably depends on whether Sally's e-bike qualifies as a "motor vehicle" as defined in the policies and under state law. If the e-bike does not fall within the homeowners policy's "motor vehicle" exclusion, the insurer might compensate the injured person up to the liability limits.

As e-bikes become more popular (and cause more serious injuries), insurers are likely to react by revising homeowners policies to more aggressively exclude e-bikes. For example, insurers could define "motor vehicle" as "a land or amphibious vehicle that is self-propelled or capable of being self-propelled," which would exclude most e-bikes.

If Sally had an e-bike policy with liability coverage, then the insurer would likely cover the resulting injuries and damages from the collision. But if Sally expects her homeowners or auto policy to cover e-bike liabilities, she may be in for a shock.

While there may be general trends in how states assess e-bike coverage under homeowners and auto insurance, policy language and state laws vary, and appear to be evolving. When an electric bicycle collision happens, those who haven't purchased e-bike coverage will need to review their policies and hope for the best.

Erin Mindoro Ezra is a regular contributing columnist on insurance coverage for Reuters Legal News and Westlaw Today.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.

Erin Mindoro Ezra manages Berger Kahn's South Orange County office in Lake Forest, Calif., focusing on insurance coverage and labor and employment. She represents and advises clients in insurance coverage matters, particularly liability insurance, and counsels and defends clients in connection with wage and hour disputes, discrimination, retaliation, and other employment matters. She can be reached at eezra@bergerkahn.com.

Mallory O. Yumol is an associate with Berger Kahn and focuses on Insurance Coverage and Examinations Under Oath. She advises insurance company clients regarding coverage issues under personal lines and conducts examinations under oath. She can be reached at myumol@bergerkahn.com.

Brennan C. Lund is an associate (pending bar admission) with the firm in Lake Forest, focusing on Insurance Coverage and Insurance Litigation. He advises insurance companies regarding complex coverage issues under commercial and personal lines. He can be reached at blund@bergerkahn.com.