BLM responds to Inquiry: e-scooters: pavement nuisance or transport innovation?

10 Jun 2020

BLM is a leading risk and insurance law firm which acts for a wide range of insurance companies providing motor and other policies in the UK and Ireland. Our 200 partners and 1500 staff are based in 13 offices in all parts of the UK and Ireland. In addition to defending claims and managing litigation, we also take part in the ongoing debate which shapes the legal environment in which we and our clients operate. A key focus has been the change in the interpretation of the scope of compulsory motor insurance as understood by both the European Motor Insurance Directive (MID) and the Road Traffic Act 1988 (RTA), which is illustrated by the line of cases from Vnuk v Zararovalnica Triglav C-162/13 and, more recently, by the English case Lewis v Tindale and MIB [2019] EWCA Civ 909 (our blog about Lewis may be consulted here).

The Committee’s current inquiry https://committees.parliament.uk/committee/153/transport-committee/news/145926/escooters-inquiry-launched/ poses the following questions:

  • whether the legislation for e-scooters is up to date and appropriate;
  • to what extent e-scooters have positive benefits, for instance relating to congestion and promoting more sustainable forms of transport;
  • where in the urban environment e-scooters could be used (e.g. road, pavement, cycle lanes), and how this could impact on other road users and pedestrians, including people who have visual impairments or use mobility aids;
  • whether there should be advice or compulsory requirements to use specific safety equipment when using an e-scooter;
  • whether there should be safety and environmental regulation for the build of e-scooters, and what this might entail; and
  • the experience of other countries where e-scooters are legal on the roads.

Given our insurance focus, this short submission is limited to the first of those and in particular to the insurance requirements in Part VI of the RTA.

The Act requires motor insurance to be in place for liabilities arising from the use of “a motor vehicle on a road or other public place”. The RTA requires that cover in respect of personal injuries is unlimited whereas a minimum limit (currently £1.2m) applies to property damage.

However, the effect of the decision in Vnuk is that the cover required by the MID is much wider than this and means, in effect, that the European requirement for compulsory insurance - to which the UK remains subject until at least 31 December 2020 - should apply to any powered motor vehicle being used as a means of transport and without restriction as to the type of land on which it is used. Lewis then confirmed that the MIB shall be liable to meet claims in the gap between the UK’s RTA insurance regime and the obligation in the MID as properly understood following Vnuk.

There would appear to be three broad options, set out in the table at the foot of this response, for insurance arrangements for e-scooters, either during limited trials or on a longer, more settled basis. In effect, these may be summarised as follows:

  • no compulsory insurance
  • conventional compulsory motor insurance
  • compulsory insurance with lower minimum limits, either
    • MID minimum level, or
    • different level(s) based on evidence of risk of harm

As a matter of principle, it appears to us that taking the policy decision to allow a new type of powered vehicle to be used on the roads very likely ought to be accompanied by the introduction of a form of compulsory insurance to protect against the risk of harm that may be caused to other road users. If this proposition is accepted it would appear to exclude adopting option 1.

We do not have specific evidence of the likely risk of harm to others associated with riding e-scooters. We can see that introducing controls and safety measures such as speed/power restrictions and driver training/licencing may moderate the risks and may therefore tend to suggest they present a less serious threat to other road users than conventional vehicles and motorcycles.

That said, negligent riding of e-scooters could foreseeably cause a car driver to take evasive action with serious consequences, leading to the same extent of injury and harm caused by negligent driving. The values of the resultant personal injury or property damage claims could easily exceed any lower level of protection introduced in respect of e-scooter use, although injury claims would have been covered in full had the injuries been caused by negligent driving. This example shows that serious thought needs to be given to setting levels of protection and to their interaction with the existing RTA regime (as well as to the claims process and the function of the MIB as a payer of last resort).

Options for insuring loss or damage caused by the use of e-scooters on roads

  1. No requirement to insure, as in the case of pedal cycles

Advantages

disadvantages

  • straightforward - easy to understand & communicate
  • no barriers to take up
  • a voluntary insurance market or scheme may develop

 

 

  • likely to require some legislative change (altering the definition of motor vehicle for RTA purposes, or derogating under MID)
  • absence of protection for injured party - save for ultimate liability of MIB
  • exposes rider to serious economic risks, i.e. the liability to pay claims
  • arguably breaches RTA and MID as currently understood
  • claims may engage other insurances, such as household policies, which were never intended to cover this risk
  1. Requirement to hold compulsory insurance to the level in the RTA, as is the case with cars and motorcycles

advantages

disadvantages

  • maximises protection for injured party - equivalent to that for conventional vehicles
  • economic risks transferred away from rider
  • compliance with RTA and MID

 

 

  • likely to require some legislative change
  • difficult to communicate - likely to be perceived as disproportionate in absence of clear evidence of likely level of harm
  • lack of UK evidence on which to base premium levels - cost could be deterrent
  • significant barriers in absence of existing insurance market and distribution channels
  • insurance enforcement and scooter registration issues
  • integration with motor insurance database
  • potential providers limited to authorised motor insurers only
  1. Compulsory insurance with lower minimum cover when compared to the RTA and commensurate with the risks arising

advantages

Disadvantages

  • protection could be better tailored to risk of harm
  • communication and public buy-in arguably more straightforward than full RTA option
  • moderate & capped levels of cover could encourage insurance market entrants, drive competition and innovation
  • potential providers might be drawn from authorised motor insurers and from liability-only insurers
  • likely to require some legislative change
  • may need to consider RTA and MID compliance when setting any limits
  • claims exceeding the limits may need to fall to MIB in any event
  • lack of UK evidence on which to base statutory limit (if lower than MID) and premium levels
  • insurance enforcement and scooter registration issues
  • integration with motor insurance database

 

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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Kerris Dale

Kerris Dale

Partner, head of office and head of motor,
Cardiff


Alistair Kinley

Alistair Kinley

Director of Policy & Government Affairs,
London


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