E-Bike Courier Insurance and Lithium-Ion Batteries

Courier delivery via bicycle is not a new phenomenon, especially in large cities like NYC, Boston, and Chicago. Bikes make it easier to navigate traffic congestion. In recent years, however, courier usage of e-bikes has risen dramatically, along with concerns about the lithium-ion batteries that power them.

E-bike weight and speed amplify the risks

Currently defined in three classes, the mid-point e-bike is a class II vehicle. With a top speed of 20 miles per hour, the battery holds enough charge to work 10- to 12-hour days. These e-bikes can carry hundreds of pounds of cargo more easily than a traditional bike.

State and local regulations vary, but municipalities may approve e-bikes for conventional bike lanes and even sidewalks. The speed and weight of the vehicles pose a greater risk for pedestrians, as riders zip quickly to their destinations. And the battery creates extra risk in the event of a collision.

Bike couriers have always needed insurance policies that cover top exposures like theft / vandalism of the bike. They’ve also carried general liability (GL) to cover risks such as colliding with pedestrians. With e-bikes, the need for coverage expands due to the cost of the bikes, as well as the increased risk from their speed and weight. A heavier bike, loaded with cargo, going at faster speed, threatens more damage and worse injuries in an accident.

In addition, insurance underwriters are looking at the safety and environmental risks of e-bikes’ lithium-ion batteries.

Cautionary tales: The dangers of e-bike lithium-ion batteries

One delivery company stationed its fleet of e-bikes at several commercial locations in a large city. The idea: to make it easy for delivery teams living nearby to hop on and begin their shifts. However, while several batteries were disconnected and stored overnight, awaiting their morning charging, a battery spontaneously caught fire. This caused tremendous damage to the building.

In another instance, hundreds of back-up batteries sat in a storage facility. When a defect caused one to begin to smoke, it became a hazmat emergency. Officials dispatched a full team of firefighters and a hazmat crew to safely dispose of the batteries and prevent further harm.

Insuring e-bikes

Both events revealed hidden dangers surrounding e-bikes and their lithium-ion batteries. Courier companies need to consider the following when deciding their insurance program:

• Third-party liability coverage for both bodily injury and property damage caused by e-bikes or batteries
• Business interruption / extra expense coverage to account for a shutdown (and / or temporarily relocation) related to a lithium-ion battery fire
• Inland marine coverage, including offsite equipment coverage, to insure the cost of damage to e-bikes / batteries held in storage
• Pollution coverage for pollution-related exposures due to lithium-ion batteries, including the cost of the hazmat team (a hazmat response can be a six-figure expense)

While some of these exposures weren’t a consideration when e-bikes first came on to the scene, understanding them now can help shape your insurance decisions.

E-bike liability considerations

Courier companies may question who is responsible for battery claims. Is it owner of the bike or the manufacturer(s)? Unfortunately, it can take weeks, months, or even years to determine the liability in a product liability claim. In the meantime, the courier operation and its insurers may need to deal with any third-party damages / injuries that have occurred, as well as their own losses.

If you’re operating a courier business utilizing e-bikes, understanding the liabilities can help you manage your risk. Make sure you know the answers to these pertinent questions when deploying and managing e-bike fleets:

• Who is the e-bike battery manufacturer?
• Are the batteries UL-certified?
• What are the recommended manufacturer guidelines for:
  - Charging, storage, and maintenance
  - Disposal
  - Safe operating conditions for the batteries (temperature range, etc.)
• Do you have company policies in place to ensure your employees follow the manufacturers’ recommendations?
• How many e-bikes/batteries will be stored in a given location at one time?
• Are there any city ordinances regarding the use / storage of large quantities of lithium-ion batteries?
• Do you have written safety plans in place in the event of a spontaneous battery fire?

Check your insurance policy and reach out if you have concerns regarding e-bikes and lithium-ion batteries.