by Dan Foster, Casualty Loss Control Expert, Munich Re Specialty – North America

Electric bicycle ownership and use have increased dramatically in the United States over the past few years, leading to a greater number of related injuries, accidents, and fires. To help minimize losses, states are enacting their own regulations for e-bike use, charging, and maintenance. But despite this progress, insurers are grappling with how to address the issue of insurability.

Year after year, electric bicycles, commonly referred to as e-bikes, break sales records. As gas prices fluctuate, many people turn to e-bikes as an economical form of transportation. Although China has the lion’s share of e-bikes in operation, unit sales in the United States increased from 437,000 in 2020 to 1.1 million in 2022.¹

Most states define an e-bike as a bicycle equipped with fully operable pedals, an electric motor less than 750 watts, and a weight of 100 pounds or less. The original concept dates back to the late 19th century, with the modern e-bike, which is powered by a lithium-ion battery, emerging in the early 2000s. 

E-bikes are three times more likely to be involved in an accident with a pedestrian than scooters or pedal bikes.² The United States Consumer Product Safety Commission (CPSC), which regulates e-bikes in the United States, reported that injuries associated with e-bikes increased 21 percent between 2021 and 2022, with at least 233 related deaths between 2017 and 2022.³ Also, a disproportionate number of injuries, 36 percent, were in children younger than 14. E-bikes cause more severe injuries than traditional bicycles due to their weight and higher travel speeds. Head injuries, specifically, have been increasing significantly, leading many states to require helmets for e-cyclists.⁴ Along with head injuries, soft tissue injuries, fractures, and internal injuries make up three quarters of the injuries e-cyclists suffer.

Some of the most common factors contributing to the frequency and severity of e-bike accidents include:

• Applying too much throttle: This is the most prevalent cause of e-bike-related accidents.
• Disobeying traffic rules: Some e-cyclists may be utterly unaware of how to handle their e-bike on the road.
• Lack of license and registration regulations: Most e-cyclists aren’t required to have a driver’s license or to register their e-bike. Not wearing a helmet: E-cyclists aren’t always required to and/or don’t always wear a helmet when operating an e-bike.
• No road access restrictions: E-bikes may be used on any path or lane that is open to bicycle travel, including roads, bike lanes, and sidewalks.
• Defective products: An e-bike’s motor can fail to stop, its brakes can jam, the front fork can fail, and its battery can overheat and catch fire.

Due to the increasing number of accidents and injuries, in 2022, the CPSC developed design and use requirements for e-bikes. Some of these include:

• Motor power that doesn’t exceed 750 watts; a bike with more power than this isn’t considered an e-bike and requires a license, tag, and insurance.
• A label that includes the e-bike’s classification, motor power, and top speed. (This applies to e-bikes built on or after January 1, 2021.)
• Identification of any modifications to the e-bike on its label. The CPSC also called on all manufacturers, retailers, importers, and distributors of e-bikes and other personal mobility devices (such as hoverboards) to comply with UL 2849, the Standard for Electrical Systems for e-Bikes, which offers electrical and fire-safety certification.

In addition, many e-bike manufacturers are providing safety guidance, and states are implementing laws to address the ownership and use of e-bikes.⁵ For example, most states now ban the purchase and use of e-bikes by anyone under age 16. Some states follow a three-tiered e-bike classification system that corresponds with regulations on when, where, and how e-bikes can be used:

• Class 1: A pedal-assisted bike with no throttle that can travel up to 20 mph; speed over 20 mph is pedal power only.
• Class 2: A pedal-assisted and throttle bike that can travel up to 20 mph without pedaling.
• Class 3: A pedal-assisted bike with no throttle that can travel up to 28 mph.

Property losses from e-bikes and other battery-powered devices, such as scooters and hoverboards, are growing due to lithium-ion batteries overheating and catching on fire. In an article from February, The New York Times reports that 255 fires and 18 deaths occurred due to lithium-ion battery fires in 2023.⁶ The account also relays details from Chief Fire Marshal Daniel Flynn of the New York City Fire Department, who says fires related to lithium-ion batteries have gone up nearly 900 percent in New York City since the pandemic, with more fires related to the batteries happening the first two months of 2024 than in all of 2019.

What causes lithium-ion batteries to overheat and catch fire? One trigger is damage to the battery pack. They can also catch fire if they are overcharged, overdepleted, or superheated or if they endure accidental abuse, such as being struck or dropped.

In addition, the batteries can sustain damage when someone attempts to repair or modify them. One particularly striking example of this is the large fire that broke out in a residential high-rise building in New York City when an unauthorized organization attempted to repair a lithium-ion battery in 2022.⁷

Recognizing these risks, but also that lithium-ion batteries have become the go-to power source for personal electronics and mobility solutions due to their small size, ability to hold a charge, and recharging capacity, many manufacturers now incorporate multiple safety features to prevent dangerous failures. The batteries are also tested for safety before being distributed to the public.

Third-party safety testing laboratories, such as Underwriters Laboratories (UL), won’t certify lithium-ion batteries if manufacturers don’t follow established safety protocols. And if battery packs aren’t UL-certified, or don’t have a similar safety label, consumers shouldn’t use them and should, instead, properly dispose of them.

To further reduce the risk of lithium-ion batteries catching fire, consumers should follow these guidelines:

• Read the label: Only UL 2271 batteries should be used in e-bikes. Nonconforming batteries should be replaced immediately by an authorized service provider.
• Avoid using damaged battery packs: Regularly inspect and remove all components that have been physically damaged or exhibit signs of failure, such as swelling or significant loss of capacity.
• Don’t attempt to repair or modify a battery pack: Damaged packs should only be repaired by an authorized service provider. And if they can’t be repaired properly, they should be disposed of according to the manufacturer’s instructions.
• Avoid overcharging or overdepleting the battery: Battery packs should be charged using the appropriate charging device and shouldn’t be used in equipment they aren’t designed for.
• Watch for overheating: Vents and other heat dissipation structures shouldn’t be blocked or damaged. A person should always be present and alert for unusual smells while a battery pack is charging.

The first step in minimizing the risk of loss due to e-bikes is taking preventive measures, such as storing e-bikes outside of and away from structures and charging e-bikes outside of buildings. Additional regulations could also make a difference. For example:

• Enacting policies and requiring signage regarding use of e-bikes on owned property
• Restricting e-bikes from pedestrian paths
• Prohibiting repair or modification of e-bike battery packs on personal property

Insurance is also typically recommended to protect against potential losses. However, at this time, liability insurance isn’t mandatory for e-bikes.

Complicating matters, e-bikes aren’t often covered under homeowners policies because they’re typically considered motorized vehicles. But because they have only two wheels, they’re excluded from most auto policies as well. While some umbrella policies cover them, not all insureds carry these policies. And, finally, only a few insurers offer policies specifically for e-bikes. As a result, e-bikes are rarely insured. However, more coverage options will likely be available in the future, as insurance companies contemplate their product offerings and seek to fill this need.

The future of e-bikes

As e-bikes evolve from loosely controlled recreational toys to regulated motorized vehicles, one thing is clear:

More regulatory changes will emerge.

For example, states and local jurisdictions aim to regulate the ownership, use, and maintenance of e-bikes. And leaders representing public places and shared habitational spaces, such as apartment complexes and housing authorities, are developing rules and restrictions regarding the storage and charging of e-bikes.

Municipalities, public parks, college campuses, and shared recreational spaces are addressing ways to safely integrate e-bikes with other exposures, such as bicycles and pedestrians. And the National Park Service and US Forest Service have passed regulations on e-bike use in their parks.

The lithium-ion battery industry will continue to be challenged to further improve the safety of its products.

Some manufacturers, for example, are now designing these batteries with built-in extinguishing systems to suppress fires.

Insurers, however, are still grappling with how to address the issue of insurability. As we have seen with other developing commodities, like drones and cyber, insurers are always looking for ways to provide consumers with coverage solutions. But until more options come to market, e-bike owners should talk with their insurer to ensure that they are adequately protecting themselves and others from risk.

Originally published in CPCU Society Insights. Shared with permission, all rights reserved.

Sources:

¹Tim Levin, “The incredible, Earth-saving electric bike is having a moment,” Business Insider, May 24, 2023.

²Charles DiMaggio, Marko Bukur, Stephen Wall, Spiros Frangos, and Andy Wen, “Injuries associated with electric-powered bikes and scooters: Analysis of US consumer product data,” National Library of Medicine, December 2020.

³United States Consumer Product Safety Commission, “E-Scooter and E-Bike Injuries Soar: 2022 Injuries Increased Nearly 21%,” October 17, 2023.

⁴Adrian Fernandez, Kevin Li, Hiren Patel, et al., “Injuries With Electric vs. Conventional Scooters and Bicycles,” JAMA, July 23, 2024.

⁵See “The Big List” at FlyRidesUSA.com for a state-by-state listing of e-bike regulations.

⁶Sarah Maslin Nir, “E-bike Battery Caused Fire That Killed Young Journalist, Officials Say,” The New York Times, February 28, 2024.

⁷Eileen Lehpamer, “FDNY shares battery safety tips after Manhattan fire that injured over 3 dozen,” PIX 11, November 7, 2022.