Article

Risk management issues surrounding e-bikes and e-scooters for dealerships and businesses across Canada

The article discusses e-bike and e-scooter risk management, focusing on fire and liability issues, and offers guidance for businesses.

As the popularity of e-bikes and e-scooters continues to surge across Canada, businesses opting to sell, rent, and/or service them must contend with the increased risks of doing so. These risks have implications for customer safety, regulatory compliance, and overall market viability.

This article explores the key risk management issues surrounding e-bikes and e-scooters, particularly in terms of fire and product liability exposures, and offers insights into how businesses can navigate these complexities.

Fire exposure

Due to the lithium-ion batteries used to power these vehicles, shops choosing to sell, rent, and/or service e-bikes and e-scooters have a fire exposure they may not have previously considered. These batteries can undergo a chemical process called thermal runaway, where an internal reaction produces so much heat that a violent fire can occur. Thermal runaway fires are self-sustaining and burn extremely hot. They are very difficult for firefighters to extinguish, especially those who are untrained, which is commonly the case.

This risk is compounded when batteries are damaged, due to improper use, storage, or charging practices. However, frequently, poorly constructed or uncertified batteries are responsible for these fires.

E-bike and e-scooter retailers need to consider the potential fire risks associated with their products, which can have widespread effects both on their premises and after sale. Here is a summary of these risks and their potential impacts:

Battery hazards: E-bikes and e-scooters typically use lithium-ion batteries, which can overheat, catch fire, or explode if they are damaged, not charged correctly, or defective.
Improper charging practices: Charging devices that are not compatible with the battery or batteries left to charge unattended can increase the risk of overheating and fire. For example, leaving batteries plugged in for extended periods can lead to overheating.
Physical damage: Accidental damage, collisions, or falls can damage the battery or electrical components, increasing the risk of fire.
Wear and tear: Aging batteries or components may become more susceptible to failure and fire.
Inadequate storage conditions: Storing e-bikes and e-scooters in areas that are too hot, too cold, or near flammable materials can heighten fire risks. Additionally, storing vehicles in crowded or cluttered areas can obstruct airflow and increase the risk of overheating.

The consequences of these risks may include:

Injury: Fires can pose serious risks to employees, customers, and visitors, potentially leading to injuries or fatalities.
Property damage: A fire caused by an e-bike or e-scooter can lead to significant damage to the business premises, including destruction of property, inventory, and equipment.
Legal liability: Businesses may face legal consequences if a fire caused by an e-bike or e-scooter results in injury or property damage, especially if it is determined that the business did not take adequate safety precautions.
Insurance implications: Fire incidents can lead to increased insurance premiums or difficulties in obtaining coverage in the future. Insurers may also investigate claims related to e-bike or e-scooter fires more closely.
Reputational damage: A fire incident can harm a business's reputation, potentially leading to loss of customer trust and financial losses.

To mitigate these fire risks, businesses should consider the following strategies:

Implement strict battery testing protocols and adhere to industry standards for battery design and manufacturing.
Ensure all e-bikes and e-scooters sold comply with UL 2849 safety standards to minimize electrical, mechanical, and fire hazards.
Provide customers with clear battery handling and charging instructions.
Require customers to remove batteries before they bring it to you for repair and only work on brands you have been properly trained to repair.
Train employees to recognize signs of battery fires and respond appropriately in emergencies.
Understand your insurance coverage regarding electrical fires caused by e-bikes and e-scooters to determine if you are adequately protected.
Establish clear organizational guidelines and procedures for charging, inspections, storage, employee training, and fire safety equipment:
- Follow approved charging protocols and monitor charging sessions.
- Conduct regular inspections for battery or component damage.
- Designate safe storage areas away from flammable materials and cluttered spaces, with adequate ventilation.
- Train staff on safe use, storage, and emergency response procedures.
- Ensure accessibility to appropriate fire safety equipment, such as fire extinguishers.

By fostering awareness of fire risks and implementing proactive safety measures, organizations can create a safer environment for both employees and customers.

Product liability exposure

E-bike and e-scooter retailers must also consider their product liability exposure. Just like for traditional bikes and scooters, product defects can lead to accidents resulting in injuries to riders, pedestrians, or other road users, as well as property damage. However, for e-bikes and e-scooters, which tend to be less regulated and frequently ridden at high speed, this opportunity for risk is magnified.

Examples of possible defects include:

Faulty design
Incorrect assembly, either by the manufacturer or retailer
Frame failure
Defective battery
Electrical component failure
Brake failure
Misaligned tires
Uncontrolled acceleration
Steering malfunction
Chain failure
Faulty mudguards

As the liaison between the manufacturer and consumer, retailers may face lawsuits if customers are injured while using e-bikes or e-scooters purchased from their location, especially if it is determined that the products were defective or that safety instructions and known dangers were not adequately communicated. Further, if the manufacturer does not have adequate product liability insurance or is outside the lawsuit’s jurisdiction, it is likely that the retailer and its liability carrier will bear the entire responsibility for the claim.

To lessen your exposure to product liability risks, here are some mitigation strategies to consider:

Vet manufacturers:
The most important and effective way to limit product liability risk is making sure to only work with reputable brands with rigorous quality control measures in place and a proven track record in the industry. You should also confirm all brands you sell have product liability insurance that is applicable to the products of theirs you carry and valid in your jurisdiction.
Procure your own product liability insurance:
Obtain comprehensive liability insurance that will cover injuries and damage caused by the e-bikes and e-scooters you have sold. This coverage can protect your business from financial losses due to claims or lawsuits.
Regularly review and update insurance policies:
Maintain adequate coverage as your business evolves and regulations change.
Educate customers:
Offer educational materials or workshops for customers on safe riding practices, maintenance, and local regulations. These items can include brochures, videos, user manuals, and in-person sessions.
Train staff:
Train staff to understand the risks associated with e-bikes and e-scooters and how to assist customers effectively. Staff should be able to enforce safety policies and provide guidance. In the same vein, invest in training programs so that technicians can service the vehicles safely and effectively.
Provide safety gear:
Encourage the use of safety gear, such as helmets and reflective vests, for when riding e-bikes and e-scooters on business premises.
Conduct regular maintenance:
Ensure that all e-bikes and e-scooters are regularly maintained and inspected for safety. This process includes checking brakes, tires, and battery functionality.
Collaborate with local governments:
Work with local authorities to stay informed about regulations and best practices related to e-bikes and e-scooters. This action can also include advocating for infrastructure improvements that enhance safety.
Take part in community awareness programs:
Participate in community programs that promote safe riding practices and educate the public about e-bike and e-scooter safety.

As e-bikes and e-scooters continue to gain traction in Canada, dealerships and businesses must proactively address the various risk management issues associated with these products. By implementing a comprehensive risk management protocol that includes clear policies, safety measures, training, and insurance coverage, businesses can significantly reduce their fire and liability risks. Proactive engagement with customers, staff, and local authorities will foster a safer environment for all users, ultimately enhancing the overall experience and reputation of your business.

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Article

Risk management issues surrounding e-bikes and e-scooters for dealerships and businesses across Canada

Fire exposure

Product liability exposure

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Risk management issues surrounding e-bikes and e-scooters for dealerships and businesses across Canada

Fire exposure

Product liability exposure

Related insights

Elevated risk of re-vinned vehicles for dealerships

Optimizing EV repair: Best practices and solutions for common challenges

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