Insurance plays a crucial role in micromobility growth
Micromobility in the U.S.
Bird, Lime and Spin are just some of the micromobility companies currently operating in the U.S. European cities also are booming with an array of innovative transportation options including the ever-popular e-scooter and e-bike. Even with the massive growth in the industry, negative news about e-scooters causing injuries, congesting sidewalks and polluting the environment taunts the growth spurt continually. As a result, the chatter of a "scootergeddon" is circulating. Nevertheless, the industry strives to win society's acceptance of these new modes of transportation. But navigating risks is a real chore for micromobility companies. Some of the main issues include:
- Rider safety;
- Operating permits; and
- Insurance regulations.
A closer look at insurance requirements
Los Angeles County was one of the first areas to embrace alternative transportation. It follows that L.A. is largely considered the birthplace of e-scooter ride-share companies. Consider that Bird used Santa Monica for beta testing, and the company also is headquartered there. Los Angeles was the first county in the U.S. to include insurance requirements on operating permit applications for e-scooter ride-share companies. L.A. also has some of the strictest microbility insurance requirements including:
- $5 million limit of general liability (GL) per occurrence for bodily injury (BI), personal injury, and property damage (PD);
- $5 million GL general aggregate;
- $1 million Hired and Non-Owned Auto (HNOA) or commercial auto liability;
- $1 million employee benefit;
- $5 million umbrella policy; and
- $2 million errors and omissions (E&O)/cyber coverage.
Other cities follow suit
[caption id="attachment_189844" align="alignright" width="300"]
Umbrella coverage is beneficial for micromobility companies because the risk of potential injuries is significant. (Shutterstock)[/caption] Other municipalities around the U.S. typically require between $1 million and $2 million in general liability coverage per occurrence for bodily injury and property damage, with $2 million to $4 million in the aggregate. One million to $2 million in HNOA or commercial auto coverage also is standard in major U.S. cities. Los Angeles County set the highest requirement at $5 million for umbrella coverage. Each state dictates its workers' compensation, so meeting the insurance requirements of $1 million doesn't often cause much fuss. However, some areas of the U.S. omit requirements for E&O and cyber coverage. Typically, the cities that require this coverage set a minimum of $1 million but rarely go over $2 million.
Structuring micromobility coverage
Despite the conglomerate of insurance requirements nationwide, structuring an effective risk management plan isn't impossible. That said, managing risk often involves coupling insurance coverages to create a more robust plan overall.
Reducing risk also is key.
A fleet of e-scooters, e-bikes, or whatever the chosen vehicle, is one of the essential assets to a micromobility company. Without this vital part, the company shutters. Therefore, maintaining the fleet is a top priority. This means keeping up with mechanics, battery life, operating permits, technology and more. Ignoring or putting off a maintenance issue will only create more significant problems in the future. Fleet maintenance is a crucial part of any risk management plan.Coverage options vary.
Utilizing insurance coverage to safeguard a micromobility company is more than just a wise move; it's a critical one. Covering a loss out-of-pocket could be detrimental to any micromobility company. General liability (GL) coverage is foundational to any risk management plan. It protects micromobility companies from the fundamental risks of doing business, such as notorious slip-and-fall claims. However, combining a GL policy with umbrella coverage can bolster any micromobility insurance plan.Understand general liability and umbrella insurance options.
Some of the prominent risks micromobility companies face include rider injuries, injury claims, cybersecurity and product malfunctions. Combining GL coverage with an umbrella program, better known as Excess GL, provides a safety net for many exposures. Keep in mind; it's standard for cities to require excess coverage of at least $1 million per occurrence and $2 million in the aggregate. Without this coverage, operating in that city is typically not allowed. Umbrella coverage is beneficial for micromobility companies because the risk of potential injuries is significant. Often, a standard GL policy isn't enough to cover damages and defense costs related to injuries. Plus, covering these costs could quickly eat away at company funds. Purchasing an umbrella policy on top of GL coverage ensures enough capital to cover the rising cost of micromobility exposures.Micromobility outlook
Many individuals touted micromobility as a passing trend, but the industry is evolving to keep success in the scope of ambition. Insurance professionals believe that first and last mile transportation is an area ripe for improvement. And insurance plans are helping to position micromobility companies for future success. The outlook for micromobility is that the industry is expected to grow. Some experts believe it will develop to $300 billion in the U.S. by 2030. This prediction isn't surprising as startup funding is being pumped into this industry rapidly. Some factors that contribute to micromobility's growth are:
- Inexpensive mode of transport;
- Last mile transportation;
- Quick and effortless transportation;
- Environmental-friendly; and
- City supported.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
