A recent video that shows a man stumbling off a Tennessee pedal pub and falling into a moving car has added to growing concerns over the safety of open-air bike bars and other so-called “transportainment” vehicles where alcohol is served. In the video, a man is seen sitting in the backseat of a parked Nashville Pedal Tavern vehicle before falling onto the street and into the path of a passing car, News Channel 5 Nashville reported in September. The man, who then walked away from the scene, was reportedly not a customer of the pedal pub and had been asked to leave.
Earlier this year in Nashville, a 22-year-old tourist was seriously injured when he fell off the railing of a roofless party bus, landed face-first onto the road and had his legs run over by the bus’s rear tires, The Tennessean reported. The July incident prompted the Nashville Convention & Visitors Corp. to call for immediate action on regulating entertainment vehicles, which have expanded over the years from basic pedal-operated taxis to patron-powered bicycle bars and even floating paddle pubs.
“Pedicabs and other similar risks have been an insurance nightmare for as long as I can remember,” said Chris Siegel, Managing Director, Burns & Wilcox, Orlando, Florida. “They have now figured out how to throw the entertainment aspect on top of it, and it is no longer relegated to just the larger metro areas. You can find them everywhere, including smaller boutique and artisan-type villages.”
These businesses generally require Commercial General Liability (CGL) Insurance, Liquor Liability Insurance, and Excess Liability Insurance, said Christian Stefanut, Broker, Commercial Insurance, Burns & Wilcox, San Francisco, California.
“When you are riding on one of these, you have to sort of climb onto it; the seat is quite a few feet off the ground,” Stefanut pointed out. “The possibility for more severe bodily injury seems to be increased and there may be a higher chance of broken bones, concussions, and things of that nature.”
Patron injuries, crashes could increase as ‘transportainment’ venues expand
Pedal pubs have been gaining steam in dozens of cities across the U.S. over the past 10 years. Calgary became the first city in Canada to allow pedal pubs in 2019, according to CBC News, and the first-ever pedal pub in Saskatchewan was set to launch in June, Global News reported.
The moving taverns have been associated with a variety of incidents, however. A woman sued a Detroit-based pedal pub operator in 2018 after suffering a fractured skull and other injuries in a pedal pub crash, the Detroit Free Press reported. In 2013, a pedal pub tipped over in Minneapolis, leading to 10 patrons being injured and two requiring hospitalization, according to a CBS Minnesota article. In Tennessee, one patron sued a pedal bar company and driver in 2017 after her foot slipped off a pedal. Her foot was dragged several feet along the pavement because the pub’s music was reportedly too loud for the driver to hear her screaming for the vehicle to stop, The Tennessean reported.
While some pedal pubs do not directly serve alcohol and only transport patrons to and from different bars, any business that serves or even facilitates the consumption of alcohol can be exposed to a greater risk of liability, Stefanut explained.
“It can be really easy for an operator to lose track of how many drinks have been consumed by each rider,” he said, adding that the ongoing hospitality worker shortage may compound the issue as a less experienced workforce enters the industry. “It can be difficult to decipher how intoxicated a rider is, whether they should be sitting in the back or not pedaling; it is fraught with issues.”
If a customer, passerby or other third party is injured due to the pedal pub’s operation, CGL Insurance policies may cover expenses such as ambulance fees, medical care, loss of wages, and defense costs. Incidents related to customer intoxication could be covered by the company’s Liquor Liability Insurance.
“Some of these vehicles have seat-backs, some have seatbelts, and others have just a plain bicycle seat. After someone has had a few drinks, their balance may not be the best,” Stefanut explained. “The situation almost lends itself to injuries if the unit does not have certain safeguards in place.”
Lawsuits related to transportainment injuries can be very costly, which makes Excess Liability Insurance another key coverage for these companies, Siegel said.
“If the injured individual is out of work for a long period of time, or if there was a fatality, there may also be non-economic damages, pain and suffering, and other things that come with those legal arguments in a court of law,” Siegel explained. “The second you erode that $1 million CGL Insurance limit because something horrible happened, you could open up your personal assets to potential attack. In a bicycle bar with 12 individuals, for example, the worst-case scenario of all 12 being fatally injured would far exceed the policy limits. That is where the Excess Liability Insurance comes into play.”
Businesses should check insurance coverage for altercations, physical damage
As the recent Nashville incident illustrates, it is not just paying customers who business owners need to worry about when they are running open-air vehicles on public streets. Other individuals could wander into the pub, be injured by the vehicle itself, or cause altercations.
“It is already an operation with its own liability issues and you may have the controls in place for your customers, including the appropriate waivers, but what you cannot account for is those who are not paying customers but insert themselves into your group,” Siegel said. “In this most recent story, you had an individual who is not a patron, who was not invited, get injured attempting to get off the vehicle.”
If intoxicated passersby are asked to leave the pub area and a conflict ensues, business owners should know that CGL Insurance and Liquor Liability Insurance may exclude assault and battery, Siegel said.
“These pedal pubs are almost like an ‘attractive nuisance’; they may be lit up or have music playing, and an intoxicated individual may try to insert themselves into that situation,” he said. “With a mobile bar, you may not have the same controls you would have in a restaurant to get a manager or otherwise address the situation.”
It is already an operation with its own liability issues … but what you cannot account for is those who are not paying customers but insert themselves into your group.
In addition to other insurance policies, transportainment companies may also need Inland Marine Insurance, which can pay for physical damage to the equipment if it is not legally licensed for road use, or Auto Liability Insurance, which can cover incidents that occur while the vehicle is in motion and can also pay for physical damage to the vehicle. State and local regulations for insurance currently vary, and these requirements could increase in the future, Siegel noted.
“This may be an area where some states begin to sharpen their rules on pedal pubs by putting them into a special class that requires licensing for road use, certain inspections, and some verification of insurance,” he said.
Stefanut agreed, saying licensing requirements for these vehicles have significantly increased over the past five to six years. “We are seeing more and more cities adopt regulations and licensing requirements as these vehicles become more prevalent,” he said. “I would not be surprised if more cities start further regulating these businesses.”
Experienced insurance broker should advise on coverage needs
While CGL Insurance, Liquor Liability Insurance and Excess Liability Insurance are all important for transportainment companies, the specific policy that would respond in the event of an accident would depend on the circumstances of the incident, Siegel explained. Due to the higher risk of third-party injuries with this type of business, having an experienced insurance broker involved is essential.
“Those are the three most important policies to secure in order to maintain and ensure a good risk transfer and the continuity of your business plan,” he said. “You need to work with a good, reputable insurance broker to make sure there is continuity in your CGL or Liquor Liability Insurance, and that the Excess Liability Insurance on top of that fits all of those policies and there are not any coverage gaps. You need someone who has good market access so you stand a better chance of getting the vital coverages that you need.”
If you do not have the appropriate risk transfer through insurance, you are essentially exposing all of your assets.
As with all business ventures, risk management plays a key role in helping to prevent accidents and limit damages if they do occur. Pedal pub operators should have strong written agreements and liability waivers for customers to sign, stay up-to-date with the latest governmental regulations, ensure they are hiring experienced drivers and operators, and conduct regular maintenance on all vehicles, Stefanut recommended.
“There may be a lot of pent-up demand for entertainment right now, and you may have customers who are a little more uninhibited,” Stefanut said. “Having trained staff, and even having staff go through alcohol awareness trainings even if they will not be serving alcohol, could be a great risk management tool. Well-maintained vehicles are also really important.”
Experience can also go a long way, Stefanut emphasized. “In both the hospitality industry and the transportation industry, prior experience is probably the best risk management tool that they can use,” he said. “It is all about the experience on the operator’s part; knowing how to operate a safe and sustainable business as opposed to somebody who is just trying to please the customer.”
Of course, even with a liability waiver and other protections in place, businesses can still be sued and face major expenses, Siegel added. “Good risk management is to always have that waiver and have it reviewed by your attorney for appropriate risk transfer, but a waiver is not a guarantee that you will walk out of court without a judgement against you,” Siegel said. “If you do not have the appropriate risk transfer through insurance, you are essentially exposing all of your assets.”