Despite what we may think about ourselves, as a species humans aren’t very good at preparing for what we can’t imagine. And while that sounds like a Captain Obvious award winner, it is especially true when it comes to technology. With all the benefits they bring, technological advances have always caused growing pains as societal structures attempt to catch up to a changed reality. And unfortunately, unexpected consequences often result.
Take the DVD. Some of you will remember the writers’ strike of the early 2000’s. To oversimplify it, television and film writers had contracts that paid residuals based on airings. So for example, they would get some amount of monetary recognition for their work when shows went into syndication, or movies were shown on TV. Then came the DVD which enabled the explosion of the Box Set. Suddenly people could own the entirety of their favorite series and watch it whenever they wanted. Great for Columbo fans, not so for the writers whose contracts did not address proceeds from the sales. Not surprisingly, the folks profiting were not eager to share their newly found stream of revenue, and so the writers’ guild went on strike to secure their piece of the pie. It eventually got sorted, but not before birthing an unintended genre. With no one to write the shows, and timeslots to fill, Reality TV burst onto the screen… and refused to leave.
What is she prattling on about? What does this have to do with insurance? Much like the writers’ contracts, existing insurance policies and the law governing them are tragically behind the technology currently shaping our world. And as we struggle to adapt to a new reality, we must remain mindful of unintended side effects. Toward that end, in this series we will examine some of the challenges that insureds, insurers, and injured parties now face as they navigate the real-world effects of the digital platform economy.
Starting with… Scooters!
So, what exactly are they? That’s an excellent question. The dock-less electric scooters that have been inundating cities across the country have a few technical names, but we’re just going to use e-scooter. While most are for hire and some are individually owned, both raise similar concerns surrounding regulation and insurance. They aren’t a car, or a moped, or a bicycle, but they are a vehicle… maybe, sometimes. The Code of Virginia, §46.2-100, defines them as follows.
“Motorized skateboard or scooter” means every vehicle, regardless of the number of its wheels in contact with the ground, that (i) is designed to allow an operator to sit or stand, (ii) has no manufacturer-issued vehicle identification number, (iii) is powered in whole or in part by an electric motor, (iv) weighs less than 100 pounds, and (iv) [sic] has a speed of no more than 20 miles per hour on a paved level surface when powered solely by the electric motor. “Motorized skateboard or scooter” includes vehicles with or without handlebars but does not include “electric personal assistive mobility devices.”
“Except as otherwise provided, for the purposes of this title, any device herein defined as a bicycle, electric personal assistive mobility device, electric power-assisted bicycle, motorized skateboard or scooter, or moped shall be deemed not to be a motor vehicle.”
“Vehicle” means every device in, on or by which any person or property is or may be transported or drawn on a highway, except electric personal delivery devices and devices moved by human power or used exclusively on stationary rails or tracks. For the purposes of Chapter 8 (§ 46.2-800 et seq.), bicycles, electric personal assistive mobility devices, electric power-assisted bicycles, motorized skateboards or scooters, and mopeds shall be vehicles while operated on a highway.”(Emphasis supplied.)
So then, is an e-scooter not a vehicle when not operated on a highway? That “rose by any other name” question is just the beginning.
§46.2-1315, which went into effect January 1st, reads as follows.
“Any county, city, town, or political subdivision may (i) by ordinance regulate or (ii) by any governing body action or administrative action establish a demonstration project or pilot program regulating the operation of motorized skateboards or scooters, bicycles, or electric power-assisted bicycles for hire, provided that such regulation or other governing body or administrative action is consistent with this title. Such ordinance or other governing body or administrative action may require persons offering motorized skateboards or scooters, bicycles, or electric power-assisted bicycles for hire to be licensed, provided that on or after January 1, 2020, in the absence of any licensing ordinance, regulation, or other action, a person may offer motorized skateboards or scooters, bicycles, or electric power-assisted bicycles for hire.”
While localities across the state rushed to put something on the books ahead of the deadline set by the General Assembly, injuries and the accompanying insurance questions had already started to accumulate. Despite this, most of the regulations and ordinances enacted by communities have focused on parking, riding on sidewalks, restrictions on areas of use, hours of operation and the like while staying woefully silent on the issue of insurance. One notable exception is the City of Richmond which requires, “… a certificate of insurance demonstrating evidence of commercial general liability insurance coverage of at least $3,000,000.00 for each occurrence and at least $5,000,000.00 in the aggregate…” be included in all applications to operate within the city. That, however, could still be read as vague as to whether that insurance would only apply if the company itself is found liable for an injury. (Side note, most user agreements include a liability waiver, for what that’s worth.)
Leaving local regulations aside, according to the laws of the Commonwealth who is responsible when something bad happens to someone? If, as defined by § 46.2-100, they aren’t a “motor vehicle” but they are a “vehicle” – at least when on a “highway” – where does coverage come from?
So far, the picture is murky and depends on the policy specifics. Most auto carriers would likely argue they fall outside of coverage, because they aren’t a motor vehicle. Many homeowner insurers would say the same, but because they are a vehicle. And unlike auto coverage there is no standard form for homeowner insurance. With the two most popular types of normal coverage in such seeming conflict, it’s understandable if you find yourself fantasizing about mandatory umbrella coverage. And while that might help with liability coverage, like primary homeowner insurance, most umbrella policies also do not provide any approximation of UM/UIM coverage. Now, that doesn’t mean you shouldn’t check your client’s policies if they are hit by an e-scooter.
Then there is the tangled web of whether the companies themselves are liable. The companies deploying e-scooters employ a significant amount of additional technologies to make the system work. And some even manufacture their own scooters. This gets into the many sections under Virginia law that could be read as applying to the providers of e-scooters, but that obviously weren’t specifically written with this new phenomenon in mind. And then there’s how all of it shifts depending on whether it is a rider who gets injured, or whether they injure someone else.
If you aren’t ready to pull your hair out yet, consider user demographics. Like most new technology, e-scooters are very popular amongst young people. Making a large percentage of riders less likely to own homes. And we all know tragically under purchased renter insurance is.
Additionally, e-scooters are widely marketed and used as “last mile transportation” meant to supplement public transportation. That doesn’t necessarily exclude vehicle owners from finding them useful, but it does raise their appeal to those without a personal vehicle, and thus potentially no auto policy. This combination leaves a large number of users possibly without any coverage to even fight about.
Then there are out-of-state tourists and cross-jurisdictional commuters. While they might be more likely to have the potential of personal coverage, they bring with them their own set of issues. Under many policies one’s motor vehicle insurance changes to conform to the regulations of a state to which the insured travels, when it comes to traditional motor vehicles. But the questions of different policy terms and requirements isn’t even close to being settled for e-scooters.
Added to this stew are the people who make the whole system work. While the platform is digital there are real people who collect, charge, service, and distribute e-scooters every day. Thus enabling the rider to drop the vehicle wherever their ride ends without worry about what happens to it next. What happens if one of these people is involved in an accident or other type of injury producing incident?
The law on this is sure to evolve relatively rapidly since people seem to love the convenience and experience of zipping around on “disposable” transportation. As it does, mind the exact specifics of the case in front of you. We all need to tread studiously in this new territory because—as of yet—there is no precedent, and no one wants to accidentally create Reality TV.
*As further evidence of this shifting landscape, several companies have recently pulled out of some markets. While some providers state the moves are for economic and business model reasons, others cite new regulations enacted by localities. If they’re willing to enter a stand-off over rules like how many vehicles they can have in their fleet, what kind of pushback would we see from proposed insurance requirements?