31.1 F
Ocean City

SCOOTER CRUNCH

State-mandated insurance could put cap on Ocean City’s seasonal rental operations

ZACK HOOPES ¦ Staff Writer

(Oct. 26, 2012) Despite the hubbub earlier this year regarding the town of Ocean City’s scooter regulations, it seems that new state-level requirements may end up having more of an impact on the growth of the scooter rental industry in the resort, by hitting rental busin esses not through the zoning code, but in the wallet.

A bevy of legislative revisions passed through the Maryland General As- s embl y thi s spring edge the safety and legal requirements for scooters and mopeds closer to those placed on motorcycles.

Riders and passengers must now wear helmets and eye protection. Scooters and mopeds must also display a title sticker, which can be acquired through the Motor Vehicle Administration and proves the origin and ownership of the machine. Scooters and mopeds must also carry a level of insurance coverage that mimics the level of financial protection for motorcycles.

“Basically, the insurance requirement for scooters is very simple,” said Ocean City Police Department Public Information Officer Mike Levy. “They have to meet the minimum for a motorcycle.”

The changes, according to the state, are intended to ensure rider safety and accountability. But in the low-cost, highturnover world of rental scooters, the insurance requirement in particular has put a damper on the fiscal viability of the industry.

“It’s been a bit of an adventure even finding [insurance],” said Ron Croker, owner of Waterways Marina on 54th Street. “There are just a limited number of companies that will underwrite in Maryland on this scale.”

For an individual who owns his own scooter, insurance is rel- atively inexpensive. But for a rental business like Croker’s — which, during the summer, has a fleet of 50 rental scooters in almost constant use — the rates are naturally much higher.

The latest quote Croker has gotten was $700 per scooter per year. Given that Croker estimates each machine to bring in about $1,200 to $1,500 per season, the insurance could cut his margin by more than half.

“I don’t think [the state legislature] realized that it would be difficult for a rental company to make money with this,” Croker said. “At some point, the cost becomes prohibitive.”

Croker, along with several other scooter shop owners, was part of a push earlier this year at the municipal level to have the town of Ocean City begin enforcing its own requirements for safety and business practices. Most controversially, the city ordinances required rental shops to have a designated practice area for rider training, which in turn created a parking shortage that put many establishments’ business licenses in jeopardy via zoning restrictions.

The city ordinances, however, seem to have not put a damper on the low-investment, seasonal rental stores that many say are the driving force behind the number of scooter accidents on the island — something which the new insurance requirements may succeed in doing.

The scooter rental industry is naturally an economy of scale, given how cheap most scooters are — many businesses in Ocean City sell off their entire rental fleet after each season for less than $500 per scooter. But in a traffic collision, a vehicle that can go up to 30 miles per hour still has the ability to incur a lot of damage and liability to both other vehicles and people.

“The intention was not to cut into [rentiers’] profit; the intention was to make these things accountable,” Levy said. “Scooters are a really inexpensive piece of equipment. They themselves are not the issue; the medical coverage is really the issue. We have so many single-vehicle wrecks here. Who pays for that?”

Croker said he was also awaiting rates from the Maryland Automobile Insurance Fund, the state-run company that provides insurance for those otherwise unable to get it.

Although in effect since Oct. 1, the fines for violation of the new requirements have been delayed until Nov. 1.

“When we approached this deadline, a number of the scooter folks — individuals and renters — said the insurance availability was not there, so we were able to work with the State Police and the MVA to extend the deadline 30 days,” said Sen. Jim Mathias.

Luckily, the new requirements have come into play early in the off-season, giving Ocean City’s scooter rental shops the most amount of time to plan for next season’s costs. But Croker predicted that the new insurance requirements would create a level of diminishing returns for many scooter businesses, as the increased insurance costs of a larger fleet began to outstrip any increase in revenue.

Previous articlePINK PARTY!!
Next articlePolitical Cartoon 10/26/12

Follow Oceancity.com

208,023FansLike
29,939FollowersFollow
1,901FollowersFollow
8,816FollowersFollow
329SubscribersSubscribe

Latest articles

Booking.com

Similar articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Yes, I would like to receive emails from OceanCity.com. Sign me up!


By submitting this form, you are consenting to receive marketing emails from: OceanCity.com, 4 Bay St., Suite D, Berlin, MD, 21811, http://www.oceancity.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact