A user mandate is a strategy a regulatory body uses in order to force e-scooter users to carry insurance.
States have the ability to regulate the business of insurance.  States may require a user to have first party and third party liability insurance. First party or underinsured/uninsured motorist insurance provides coverage for instances in which the person is unable to be compensated by the other party. Third party insurance provides coverage for an injured third party. It gives the insured protection against costs resulting from damages to third parties. The majority of States have decided it is in the best interest of the public to require third party liability insurance for motor vehicles due to the high number of accidents. States wanted to ensure those driving on public roads were financially responsible for damages they may cause, and minimum third party liability insurance requirements were developed.
The need, or lack of a need, for third party liability insurance for E-scooter users will differ from State to State. States or local municipalities may adopt laws or regulations setting requirements for users depending on the use of E-scooters by their constituents.
To create a policy best for an area, an insurance commission can be tasked to determine applicable laws and provide guidance. In some states it may be best to leave policies to specific cities, others may see wide usage across the state, so a state policy may be more beneficial and effective.
For example, Georgia defines moped as “a motor driven cycle equipped with two or three wheels, with or without foot pedals to permit muscular propulsion, and an independent power source providing a maximum of two brake horsepower.” This definition may encompass an e-scooter as well providing problems if Georgia wishes to regulate the two separately.
More information on local vs State regulation can be found here.
There are a number of requirements that cities impose on Providers as a condition of deploying units. These requirements include minimum general commercial liability insurance coverage, performance bonds and indemnification agreements.
General Commercial Liability Insurance
Aside from individual user insurance policies, protection also exists in the form of general commercial liability insurance. This form of coverage is required of all Providers seeking a permit to deploy their E-scooters in a given city. Most ordinances require that the Provider maintain general liability insurance limits of at least one million dollars per occurrence for bodily injury, personal injury and property damage. Some cities, including Fort Lauderdale and Nashville, require a minimum of two million dollars per occurrence in general liability insurance. Other cities, like Oakland, California, took an initial approach at the complete opposite end of the spectrum – permitting dockless scooter companies to deploy their scooters into the city without any sort of regulations whatsoever. While the scooters were generally well received, the city eventually had to put a pause on the scooter phenomenon to enact regulations and require companies to apply for permits. These regulations included the typical liability insurance requirements that you see in cities across the country.
Potential legal language for a city seeking to implement a general commercial liability insurance requirement on prospective Providers could look something like this:
“A Provider shall provide and maintain a minimum of one million dollars ($1,000,000) per occurrence in commercial general liability insurance to protect the City of [ ], its representatives, employees, and elected and appointed officials, from all claims and damage to property or bodily injury, including death, which may arise from any aspect of its operations in the City.”
* This language is modified from Fort Lauderdale, Fl., Ordinance No. C-18-16 (last updated Jul. 10, 2018); Nashville, Tn., Second Substitute Bill BL2018-1202 (Aug. 29, 2018). For further clarity regarding terminology, see “About Us & FAQs.”
Many cities currently require dockless mobility providers to indemnify the City of any and all claims or damages. Indemnification is the act of making good on a duty to compensate another for any loss, damage or liability they incurred. It is typically a contractual obligation to shift the liability of one party to another party, who then takes on the responsibility to make right any wrong that falls into the categories negotiated by the parties. The wording of the indemnification clauses in city ordinances differ slightly, but those small differences may have large implications in certain circumstances. Charlotte’s ordinance requires the provider to indemnify the City of claims arising from the Provider’s failure to perform its obligations under this Permit, or from any act of negligence or willful misconduct by the Provider or any of its agents, employees or subcontractors.  This ordinance seems to only indemnify the city when the damage or claim results from the Providers breach of obligation or negligence or intentional conduct. Conversely, Atlanta’s ordinance indemnifies the city “for all liability related to the operation of the Shareable Dockless Mobility Device System.” This provision is much broader than that of Charlotte’s. It could potentially cover many more incidents than those covered by Charlotte’s ordinance, but it could also be considered too ambiguous and fail to cover some events.
For potential legal language for a city seeking to implement an indemnification requirement on prospective Providers as well as an in depth discussion about indemnification generally, click here.
Many cities also require e-scooter Providers to provide the city with a performance bond. A performance bond is a loan, typically backed by a bank or an insurance company, which one party to a contract requires the other party to provide as a guarantee that the providing party will meet their contractual obligations. In this context, performance bonds are provided to the city and are accessible by the city for public property repair and maintenance costs that may be incurred relating to E-scooters. The amount of these performance bonds vary between cities – even cities within the same state. In Texas, Austin requires a performance bond of one hundred dollars per unit deployed in the jurisdiction, while Dallas requires a minimum bond of ten thousand dollars. Many cities also require the Provider to reimburse the city for any damages or costs incurred within thirty days of the Provider’s receipt of written notice of the costs.
Potential legal language for a city seeking to implement a performance bond requirement on prospective Providers could look something like this:
“All permitted Providers shall maintain a performance bond of eighty dollars ($80) per unit with a cap of one hundred thousand dollars ($100,000). These funds shall be accessible to the [City] Government for public property repair and maintenance costs that may be incurred related to the use, removal, or storage of units improperly parked, or if a company is not present to remove their units if its permit is terminated. If a permitted Provider increases the size of their fleet, the performance bond shall be adjusted appropriated before deploying additional units.”
* This language is modified from Nashville, Tn., Ordinance No. C-18-16 (last updated Jul. 10, 2018); Austin, Tx., Rule No: R161-18.09 (Nov. 19, 2018). For further clarity regarding terminology, see “About Us & FAQs.”
In addition to these requirements imposed upon Providers by cities, a Provider could attempt to limit their risk of loss in the event of an E-scooter incident by spreading that risk to the user.
Providers Risk-Spreading Through Fees or Premiums
In this model, briefly discussed here, Providers would be required to insure their individual users for the user’s negligence through an additional fee that is assessed based on the length of the trip. The longer the ride, the greater the risk of an accident and the higher the incremental fee should be. All of the Provider’s users would pool their fees together through the Provider who could then use them to purchase an insurance plan covering its users or simply set these extra fees aside as a form of self-insurance. An alternative to an increase in the price of rides could be a flat monthly or yearly premium that all users must pay to ride an E-scooter. This option would accomplish the same goal while keeping the average price of E-scooter rides lower and likely more appealing to potential users.
Spreading the fee across all users allows for users to be covered while maintaining the affordability that makes this mode of transportation especially desirable. This option is simpler than individual user insurance but has its drawbacks as well. One of the major appeals of E-scooters is the low-cost. Casual users may be put off by the prospect of having to pay extra for insurance on top of the cost of the ride itself. Unless a user utilizes E-scooters on a fairly regular basis, they may not believe that paying extra for insurance is worth the benefits derived from their use of the vehicle. Additionally, some Providers may be hesitant to provide for the negligence of their users even if the cost of such risk is ultimately shifted back to the user.
The McCarran-Ferguson Act of 1945 affirmed States have this right 15 U.S.C.A. § 1011 (West 2018), 15 U.S.C.A. § 1012 (West 2018)
 Georgia statute defining moped 40-1-1(28) https://law.justia.com/codes/georgia/2010/title-40/chapter-1/40-1-1/
 “City Commission of the City of Fort Lauderdale, Ordinance No. C-18-16 (2018), available at https://library.municode.com/fl/fort_lauderdale/ordinances/code_of_ordinances?nodeId=914102 (last visited August 1, 2022)”
“Metro Government of Nashville & Davidson County, Tennessee, Second Substitute Bill BL2018-1202 (as amended) (2018), available at
 “Ali Tadayon, Oakland to Crack Down on E-Scooters, 2018, East Bay Times, https://www.eastbaytimes.com/2018/09/18/oakland-imposes-new-rules-on-e-scooter-companies/.”
 “City of Oakland, Dockless Scooter Share Program Terms and Conditions + Permit Application (2018), available at https://cao-94612.s3.amazonaws.com/documents/OakDOT-Scooter-Terms-Conditions-Dec-2018.pdf (last visited Feb. 27, 2019).”
 “Art Neill, Erika Lee, 2018, What Exactly is Indemnification, and How Does it Affect a Freelance Contributor?, Forbes, https://www.forbes.com/sites/artneill/2018/11/14/what-exactly-is-indemnification-and-how-does-it-affect-a-freelance-contributor/#4f6f92256f10.”
 “Charlotte Department of Transportation, Dockless Bike / E-Scooter Share Permit Requirements (2018), available at https://charlottenc.gov/Transportation/Programs/Documents/CharlotteDocklessBikeAndE-ScooterSharePermitRequirements.pdf (last visited Feb. 24, 2019).”
 “City of Atlanta, An Ordinance to Amend Chapter 150 Traffic and Vehicles of the Atlanta City Code of Ordinances to Create Article X ‘Shareable Dockless Mobility Devices’ to Establish Regulations Related to Shareable Mobility Devices; and for Other Purposes (2019), available at https://www.atlantaga.gov/home/showdocument?id=39601 (last visited Feb. 10, 2019).”
 “James Chen, Performance Bond, 2018, Investopedia, https://www.investopedia.com/terms/p/performancebond.asp.”
 “Austin Transportation Department, Notice of Rule Adoption, Rule No: R161-18.09 (2018), available at http://austintexas.gov/sites/default/files/files/Transportation/Final_Notice_of_Rule_Adoption.pdf (last visited Feb. 10, 2019).”
“Dallas City Hall, Ordinance No. 30936 (2018), available at https://dallascityhall.com/departments/transportation/DCH%20Documents/Dockless%20Vehicles/Dockless%20Vehicle%20Ordinance.pdf (last visited Apr. 5, 2019).”