An analysis of home contents policies in the insurance market has found significant complexity and variation in the policy wording -- leaving many e-bike and drone owners unexpectedly without cover for loss, damage or third party liability, according to NZbrokers, one of New Zealand's largest insurance brokerage groups.
In a statement, Mr Simon Moss, partner services manager of NZbrokers, said, “When consumers purchase this type of technology, they tend to think of it as they would for a model aircraft or push bike—as they are seen to perform the same function.
“The insurance company is looking at it very differently however—while they may cover your NZ$5,000 ($3,408) push bike, many will not cover your e-bike of the same value because of terms in the policy or the legal status of your e-bike.
“Similarly, a drone may be treated by insurers as a type of aircraft if it is capable of lifting more than its own weight—a criteria which is impossible for most consumers to measure.
“What this means is your drone may be covered for loss if you drop it while getting it out of the car, but if it falls from the sky while in use, you are on your own.”
According to Statistics NZ, there are now an estimated 40,000 e-bike owners in the country, with some 500 watt models costing almost NZ$10,000.
Meanwhile, the growth in recreational drones has seen a wide range of products enter the market and they can retail at more than NZ$5,000. Almost 700 complaints have been made to the Civil Aviation Authority about users of drones in the past five years.
From the insurer's perspective, drones and e-bikes are an unknown risk and until they have an accurate picture of that risk they will tend to act conservatively, Mr Moss said.
He says once insurers start to see a claims trend it is likely that more exclusions and conditions will be applied to both e-bikes and drones.
“Historically we have seen a precedent for this type of model, in the 60s & 70s insurers began to exclude sporting goods ‘while in use’ after they found themselves paying out for bent golf clubs and damaged windsurfers!
“Later, we saw a similar trend with laptops, after insurers realised they were replacing damaged technology with better equipment because you couldn't buy the same product with old software anymore. So, anything over two-three years of age would then be replaced at its second hand value,” he said.
He says some home contents policies will cover an e-bike if its output is under 300 watts, which is the ‘maximum power output’ before the bike is classified as a motorcycle by NZTA regulations.
“This is one source of potential confusion as some e-bike motor manufacturers print on the motor their maximum ‘input power’ because that number is larger (typically motors run at about 80% efficiency) thus giving the impression the buyer is getting a more powerful motor.
“Conversely a consumer may see ‘300 watts’ written on the motor, but the bike may generate more power than this when in use,” he said.
Mr Moss says some policies will not cover e-bikes and drones while others will set maximum standard limits but will include third party damage.
“The risk of a road accident on an e-bike, which can travel in excess of 40 kmph, is at least as high as any other road user travelling at that speed and most home content policies we looked at don't cover owners for third party damage to other vehicles.
“And if a drone happens to cause an accident while it is in use near a road, the owner will be left to foot the bill in most circumstances,” he said.
Mr Moss says that while there are no e-bike specific policies on the market at the moment, some insurers are starting to offer better cover for drones.