Scooter industry throttled back by new laws and insurance cost

Scooter industry throttled back by new laws and insurance cost

(July 26, 2013) Although business is reportedly down in many sectors throughout Ocean City this summer, a seemingly perfect pre-mix of increased regulation has put the muffler on the familiar two-stroke hum of the resort’s scooter rental industry.

The number of licensed rental locations for scooters has dropped from 20 last year to eight this year, according to city Zoning Administrator R. Blaine Smith.

Despite the fact that the city imposed its own heavy zoning restrictions on scooter rental shops last year, the decisive factor in many rentals’ decision to pack up shop appears to be the financial burden imposed by the state.

“My impression is that this is less from our enforcement and more because of the state criteria,” Smith said.

A bevy of legislative revisions passed through the Maryland State Senate and General Assembly this spring edge the safety and legal requirements for scooters and mopeds closer to those placed on motorcycles.

Riders and passengers must now have 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.

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

“The insurance for the operators was the nail in the coffin, because you’re talking about a very thin profit margin here,” said Ron Croker, owner of Waterways Marina. “I think scooters have fallen victim to a number of things, and I couldn’t tell you that it’s the economy by itself or the insurance by itself. But each one has added a little burden to it.”

Scooters are particularly difficult to insure since their ability to cause property damage or personal injury far outstrips their actual cost. Annual premiums average around $700, more than the price of the machine itself in many cases.

Last year, Croker operated three locations with a fleet of 56 rental scooters. He’s now down to 30 scooters, at an annual insurance premium of nearly $17,000 for his fleet.

“We basically closed one of the locations and were in the process of closing the second one,” Croker said. “We’re going to try opening that one back up in August to see how it does, if business has picked up. Two employees we let go because we closed a location, and we just sort of consolidated the other employees we had between the remaining locations.”

Much like a car rental, those renting scooters must be able to sign off most of the liability to their own insurance carrier. Even so, getting claims approved for damage caused by his renters to other vehicles has been arduous, Croker said.

Croker, along with several other scooter shop owners, was part of a push last year at the municipal level to have the Town of Ocean City begin enforcing its own requirements for safety and business practices. Controversially, however, the city ended up requiring 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.

“Scooters, I think, fell victim to the amount of bad publicity and the amount of time that the city and the state eventually put in to regulate them,” Croker said.

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