Insights Special: The Insurance Challenges of e-Bikes & e-Scooters

Where are we on e-bikes and e-scooters?

Many of the trials organised by Councils and govt agencies over the last decade or so have drawn criticism from disability groups, who rightly point out that more street hazards for the partially sighted, or hearing impaired, is not universally good news. Commuters in wet cold Britain aren’t using e-bikes very much outside of London, they prefer a car, tram or bus. Plus for many low wage workers an investment of £1000-£1800 is considerable and the theft risk is growing on electric bicycles.

Then there’s the general fire risk from lithium battery packs. This is a wider issue, and something that Aviva warned about today;

“Aviva is urging consumers to be on their guard after seeing a seven percent increase in customer claims over the past year for fires started by lithium-ion batteries, commonly found in rechargeable devices like mobile phones, tablets, power tools, e-bikes, and e-scooters.

The data, which looks at fire claims across 2022 and 2023, includes a significant house fire started by an e-cigarette being charged with an incompatible charger, extensive fire damage to a house after an e-bike with a second-hand battery was left charging unattended in a bedroom, a phone which exploded during charging after getting wet, an annexe which was destroyed by fire after batteries were left charging unattended, and fire in a garage after a faulty charger was used to charge a remote control car.”

EXPLODING BATTERY PACKS

This trend in claims, says Aviva, is also highlighted in additional research commissioned by the insurer which reveals that one in 9 Brits  have suffered a fire (11%) or explosion (11%) in their home due to a lithium-ion battery or device. Almost one in 10 (9%) have experienced scorching of a surface where a lithium-ion battery or device was charging, and two in 10 (20%) have a battery or device which has overheated.

Ian, 57, a Customer Assistant from the Isle of Wight was at home when his Bluetooth earbuds exploded, he said:

“I was charging my headphones next to me on the sofa and without realising, accidentally plugged them in using an incorrect charger. The light didn’t illuminate properly, but I still thought they were charging.

“After about five minutes, the headphones started smoking and within seconds both the headphones and the battery case exploded. The metal and plastic from the headphones then melted to the sofa and set it ablaze.

“Luckily, I was able to put the flames out, but I had a shock and have been left with a burn hole in my sofa. I dread to think what would have happened if I had been asleep or was not in the property, as there is no doubt the sofa and house would have gone up in flames.”

EBAY WITHDRAWS FROM PRIVATE E-BIKE AUCTIONS AND SALES

In other news today eBay has banned sales of e-bicycles and battery packs, except via authorised sellers. These will presumably be companies in the UK and elsewhere, who are trade suppliers or bicycle retail brands. The knock-on effect of restrictions on battery pack sales will be that prices rise as supply is restricted to bike dealerships and trade wholesalers. On the upside safety standards will rise, hopefully.

For insurers the upside is that the distribution of battery packs will be easier to track, and therefore less risky for Commercial insurers in the bicycle sector. It may cause a spike in claims 2-3 years down the road, as owners of 2K e-bikes realise a new battery is going to cost them over £400, so a `theft incident’ might be a better solution than selling a bicycle with a duff battery?

DELIVERY SECTOR CHALLENGE

On the delivery front, e-bikes have become the default choice for urban food drop-offs. Makes sense, although questions remain about freelance couriers who may – or may not – have the legal right to work in the UK. Perhaps insurers need to set up their own ID verification systems for fleet operators, with per-pay-shift insurance cover offering a means to gather data on riskier agencies, freelancers or locations?

The issue of delivery riders all wearing masks, scarves and black clothing to disguise their identity is something that insurers will have to face up to one day. Accountability is essential when it comes to an accident and fleet/food operators need to be made aware that cover may be withdrawn if riders fail to co-operate with Police or leave the scene of a serious accident. 

Insurers cannot condone a “wild west” street environment, surely?

LESSONS FROM HISTORY

In early 2024 Nottingham Council cancelled its e-scooter trial, or the company running it decided to call it quits – your choice on which press release to believe. But e-scooters are coming back to the city, which has a tram service as well as buses in the centre, this time with audited parking “corrals” for scooters.

The update from Nottingham also repeats calls for new legislation on e-scooter use on public roads, effectively making private usage legal. So why bother with a hire trial? You can’t have it both ways. IE thinks that unregulated e-bike and e-scooter use is causing accidents with pedestrians (especially the more vulnerable) and criminal gangs are using e-bikes and e-scooters to distribute drugs and other illegal products.

In the long run insurers would be wise to walk away from covering trial schemes and e-scooters in general, assuming they are legalised by the new Labour government. The Labour party is pro-green, as Ed Milliband’s announcements prove, so expect e-scooter road use to get the green light soon, with the caveat that users are “advised” to obtain third party insurance.

IE advice is don’t offer cover, the PI risks are far too great and one claim could cost millions in compensation for life-changing injuries. It also heads off a class action claim from people injured by both hired and privately owned e-scooters, which is inevitable, given that the laws allowing use will vary from city to city, or regional UK government remit.

If insurers choose to ignore the data regarding elderly pedestrians being injured by e-bikes and scooters then were they being wilfully negligent in enabling their use? That will be issue one day, make no mistake.

Remember it was legal to sell PPI in the 90s, look how that ended.

OK, stay safe, here are Aviva’s top tips for staying safe around lithium-ion batteries:

Proper care of lithium-ion batteries and devices can help extend the life of the battery and reduce the risk of battery fires.

• Use the original battery for the device or a manufacturer recommended battery if a replacement is needed. Using non-compatible batteries can cause the battery to fail and can be a fire risk.
• Monitor the condition of the battery or device. Check for damage including bulging, dents, or signs of overheating. If you notice any damage, stop using the device immediately and replace the battery.

• Learn the signs that a lithium-ion battery is about to fail. These include excessive heat, unusual smells, bulging batteries, leaking, unusual noises such as cracking or hissing and poor performance of a device.

• Store batteries and devices safely. When not in use, store devices in a cool, dry place away from direct sunlight and flammable materials.
• Ensure you have smoke alarms installed at your property. Early warning systems such as smoke alarms and heat alarms can alert you to fires before they become a serious threat to life.

Charging lithium-ion batteries and devices safely:

• Always use manufacturer-approved chargers specifically designed for the device. Cheap or counterfeit chargers can be deadly as they may lack safety features and cause overcharging and overheating.
• Avoid overcharging the battery. Disconnect your device when it is fully charged and unplug the charger. Leaving items on charge continuously, such as overnight while sleeping, can be a significant fire hazard.
• Monitor batteries and devices while charging and don’t leave them unattended. There are numerous cases of fires starting while people are charging items in different rooms, sleeping, or have even left the house. Catching an overheating battery early can help reduce the risk of a serious fire or serious injury.
• Charge batteries and devices in a safe location. Charge on a flat, non-flammable surface and avoid charging batteries or devices on soft surfaces such as beds, or close to flammable materials and hazardous substances. If a lithium-ion battery overheats, it can ignite flammable materials and cause a fire.
• Never charge batteries or devices in hallways, doors or blocking escape routes. If there is a fire, you will need to be able to escape safely.
• Inspect cables and connectors for signs of damage and wear. Replace any frayed or damaged components to prevent short-circuiting.

• Do not charge lithium-ion batteries in high temperatures or in direct sunlight. High temperatures can cause the battery to overheat and is a fire risk.
• Charge and store batteries in a fire-retardant box. A fire-retardant box will offer some protection if the battery or device overheats and catches fire, containing the explosion and helping towards preventing serious fire damage.
• Teach children how to use and charge lithium-ion batteries and devices safely. Parental supervision while using and charging devices can help prevent unsafe practices, alongside charging items outside of bedrooms.