InSur-Op-Ed: Claim Denials and Agency Accommodations

Should A Pedal-Assist E-bike Be Considered A ‘Motor Vehicle’?

An agent contacted me recently about a denied claim under a 2011 ISO HO 00 06 condo form. The named insured’s $3,000 e-bike was stolen and the carrier denied the claim, citing the “motor vehicle” exclusion. The question was whether a pedal-assist e-bike is a “motor vehicle.”

The policy defines “motor vehicle” to be a “self-propelled” vehicle. To me, that means a full-throttle vehicle, not one that can be pedaled. A car is a motor vehicle…it won’t run unless the motor is engaged. A riding mower is a motor vehicle and can’t be operated without the motor running. A motorcycle also can’t serve as a vehicle to transport persons or property unless the motor is used. This e-bike can be operated without engaging the motor.

If the e-bike can be operated under pedal power or via motor-assisted pedaling, then I don’t believe it’s a “motor vehicle” as that term is generally considered or intended under the policy language. Of course, I could be wrong, but at least there’s an argument for ambiguity and the insured usually wins such argument.

March is Ethics Awareness Month For the insurance industry

But, given that March is Ethics Awareness Week (sic) for the insurance industry, there is another angle to the claim denial. The correspondence from the insurer included this statement: “If you’d like us to consider an agency accommodation to make a one-time exception for this loss, please let me know.”

I don’t have a problem with agency accommodations per se, but I do if such claim payments come from claim reserves. I believe that claim reserves should be used only to pay COVERED claims. If the carrier doesn’t believe the claim is covered but is willing to pay it, that payment should come from another account, maybe a charitable one.

I’m not sure if this is an ethical issue or a regulatory one. The insurer would be doing something nice for THIS insured, but what about others that don’t get an “accommodation”? Is this discriminatory though well-intended?

What do you think? Feel free to give your opinion in the Comments below.

P.S. If you’d like to read an article about e-bikes and insurance, check out this one from coverage expert David Thompson: What You Need to Know About E-Bikes! (johnsonstrategiesllc.com)

Bill Wilson, CPCU, ARM, AIM, AAM

Founder at InsuranceCommentary.com

One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.