MMA is now offering the same coverage and its partner carriers are now using the same underwriting guidelines for e-bike retail shops as for traditional bike shops. The previously offered, excess/surplus lines policies are not as appealing. It is safe to say that most retailers predominantly selling e-bikes are written within the excess/surplus lines marketplaces-the higher risk insurance marketplace. These carriers are accessed through a wholesaler. So, the insurance broker does not have a direct contract with the carrier, forcing the broker to run everything through a third party. This results in inefficiencies.
Excess/surplus lines policies include:
- Higher minimum premiums
- Watered-down coverages
- Gross sales audits (The carrier audits the retailer'ss gross sales at the end of the term and if it underestimated, the retailer pays additional premium.)
Why Insurers Refused to Write E-Bike Policies in the Past
Without significant actuarial data specific to e-bike claims, the standard market underwriters refused to consider writing policies for e-bike retailers. Most carriers still have this attitude and are not flexible. In addition, many of the early e-bike manufacturers were domiciled outside of the United States and those companies did NOT carry proper product liability coverage. Without a properly written product liability policy, the retailer essentially, carries all of the product liability risk. About three years ago, while in the process of writing an e-bike retailer, I asked the retailer to supply Certificates of Insurance from all of the manufacturers of products sold within its shop. Six out of the 13 manufacturers did NOT have product liability policies with coverage in the United States. That was an eye-opener for the retailer. The retailer chose not to do business with some of those manufactures as a result.
Good News. Change is Here.
In 2017, the e-bike industry is becoming more "mainstream," as some of the "big brands" are selling a line of e-bikes. The mid-drive systems allow e-bikes to ride more like "regular" bicycles. Basically, power is not provided unless you are pedaling. E-bikes are lighter and easier to control. There have been huge advancements in battery safety. There are still a lot of e-bike brands that can be directly imported and have serious product liability deficiencies, but it is not as serious as five years ago.
Finally, we have a fantastic solution with a "standard market" insurer that will provide the same coverage and same underwriting guidelines as a "traditional" bricks and mortar bike shop. These policies will have our same bicycle-specific additional coverages.