Insurance snag - when is an e-scooter a motor vehicle? - Diana Clement

Is your electric scooter or bicycle covered by your contents insurance policy? Photo / RNZ

OPINION

Trick question: Is your shiny new electric scooter or bicycle covered by your contents insurance policy? Most of us assume so, and our insurers pay out plenty of claims for stolen e-bikes and scooters. Standard contents policies also cover policyholders for damage to third-party property - such as that brand new Tesla you just hit.

There’s a big “but” however. There’s a limit on just how powerful that e-scooter or bike can be. Over 300W output and you kiss your household contents cover goodbye because, technically, your e-scooter or bike becomes a motor vehicle and should be registered as such, a senior insurance figure told me as I commuted to Auckland on the ferry. “You have to write about this,” he said.

“Contents policies exclude motor vehicles and you would need to take vehicle insurance out as you would a car or motorbike, which is not practical,” he said.

A spokesperson for NZTA Waka Kotahi confirmed that my source’s information was correct on the 300W threshold for licensing.

The only trouble is you can’t license an e-scooter or bike. It would need correct lighting, warrant of fitness (WoF), number plate, etcetera, my insurance contact told me. I’m sure VTNZ staff would look at you sideways if you turned up with an e-scooter for a WoF check.

On the surface, this all sounds like a storm in a teacup. However, more and more expensive, high-powered scooters and bikes are being sold in New Zealand by the day. So more uninsured owners. It’s black and white, my contact says. “You’re not covered.”

I asked AA Insurance, and IAG [which owns AMI, State and NZI] and they confirmed their contents policies don’t cover scooters and bikes with an output over 300W. An IAG spokesperson said customers with more powerful e-scooters and bikes needed to make contact to discuss their insurance.

Out of interest, I called the 0800 number of my own insurance company to see what happened if I wanted to insure a 400W e-bike. The first staff member handled the call correctly. She pointed out that a 400W e-bike was excluded under my contents policy, but that I could get a motorcycle policy. I’m sure not many e-scooter and bike owners think to do that.

Then came the Catch 22 moment. I phoned back to see how much it would cost to insure a 400W Tern Vektron Q9 e-bike under a motorcycle policy, but was told that the policy doesn’t cover pedal-assist electric bikes and that it would be covered under my contents policy even at 400W. This was with the same company that told me in the previous call that a 400W e-scooter or bike wasn’t covered under a contents policy and I needed a motorcycle policy.

Asked what would happen if someone bought a powerful e-scooter or bike and assumed wrongly it was covered by their contents policy, IAG’s spokesperson said the company would “work with the customer on a case-by-case basis”. Unfortunately from my many years of experience of writing about insurance, reading case notes, and even working in insurance claims before becoming a journalist, more often than not “case-by-case” means your claim will be declined.

The insurance contact who floated this story idea in the first place was unequivocal: “No, you’re not covered.”

I checked, and so far no cases have made it to the Insurance & Savings Ombudsman. But they will in time. Owners of $10,000 e-bikes won’t give up without a fight if their bike is stolen and they find they’re not covered by contents insurance. Ditto for the cost of third-party damage they cause.

Another new addition to my knowledge base from my ferry contact was that some e-scooters and bikes start life with motors greater than 300W output, but are “chipped” in the shops to have their power reduced. The owner can increase the power again by reprogramming the electronic control unit. I can well imagine teenagers managing to do that without mum and dad realising, and thus kissing goodbye their insurance cover.

Finally, the other thing to consider when buying a very powerful e-scooter or bike is the damage you can do to yourself. We’ve had e-scooter deaths in New Zealand already. ACC paid out more than $8.187m for e-scooter accidents alone from January to November 2023. “Most injuries are preventable by taking a moment to ‘have a hmmm’ and think about what could go wrong,” says Whitaker, ACC injury prevention leader.