THE B.L.S [Boring Legal Sh…err… Stuff] FOR TODAY’S CYCLIST – 2014 Edition
By Steven M. Magas, The Bike Lawyer
Can’t you just picture it – maps laid out, clothes folded ready to be loaded into waiting panniers, bike all tuned up, stretchy Gore-Tex gear abounds and the banana-like smell of Teflon oil floating about the room. The last thing on the touring cyclist’s mind as she/he goes through their mental Pre-Trip Checklist is the “BLS.” Unfortunately, failure to consider the BLS of Insurance and Estate Planning can end up costing the touring cyclist, and his family, time, money and peace of mind!
PART I – INSURANCE ISSUES for Today’s Cyclist
Insurance? You don’t need to worry about no stinkin’ insurance, right? You’re driving a BIKE for two weeks, not a car … what can POSSIBLY happen? [For this part of the article, let’s assume you are staying inside the United States – things REALLY get crazy in the insurance world when you cross sovereign borders!]
First, and foremost, before you leave the house make sure you are carrying all of your health insurance information. Keep it close at hand – better yet, pack your insurance card, or a copy, in a small [2”x3”] baggie with a copy of your ID, emergency contact information and list of medical allergies. Store this on your person – or in your helmet!
If you are hurt on the road, unable to communicate and need emergency care or serious medical intervention you do NOT want healthcare professionals wondering who you are, who to contact and whether or not you’ve got health insurance!
I, like many others, wear a RoadID bracelet as a safety measure… and a fashion statement… This allows first responders the opportunity to address you by your given name when you don’t remember what country you are in… There are many versions of these safety bracelets out there… Get One – Wear It –
WARNING: While I have not yet seen this in my “bicycle law” practice, I have learned from my “motorcycle law” practice that a few health insurers are limiting the benefits they provide if an insured is injured while riding a motorcycle or engaging in certain other “hazardous sports.” As you might expect, motorcycle groups have been up in arms and preparing to do battle. However, under insurance policies in force right now, a motorcyclist can hit by a DRUNK driver and have NO health insurance coverage! If insurers find this effective, you can BET they will apply the concept to cycling very soon!
Homeowner’s Insurance – Say WHAT?
Why in the world would you need your homeowner’s policy information while riding your bicycle? Let’s say you ride from Ohio to Wisconsin. While touring through Madison you are distracted by the foliage and the incredible bike facilities and you run into a pedestrian who has the right of way in a crosswalk. The pedestrian is injured severely, and screams “I’m Gonna SUE YOU” as he is loaded into the ambulance. The police report shows you to be completely at fault… what do you do? Who pays this claim?
Surprisingly, your HOMEOWNER’s or RENTER’S insurance can provide liability coverage to pay the claim! A claim against you due to your careless riding is generally covered the same way a slip and fall or other premises liability claim would be covered.
In one recent case I handled, my cyclist/client was hit by a guy on a motorcycle. The motorcyclist was passing my client, over a double yellow, on a blind curve at a point on the curve where a bike trail intersects. My client was moving towards the bike trail when he was struck by the motorcyclist. As we were preparing to present the injury claim to the motorcyclist’s insurer I received word the motorcyclist had sued my client! I then notified the client’s homeowner’s insurer, who assigned a lawyer to defend that claim. I then filed a counterclaim against the motorcyclist, who notified HIS carrier, and that carrier retained an insurance defense lawyer to defend him. So now there were 4 lawyers in this case!
If you are going on an extended trip, take your agent’s phone number and your policy number. If someone claims YOU did something wrong, causing them loss, damage or injury, you will need to file a claim right away!
Another reason to keep your H/O policy up to snuff is that you can use it to replace your bike in a crash, or add your high-end bike to the policy through a “rider.” A rider is a separate mini-policy covering particular, usually high end items. You pay a bit of a premium but if your $10,000 bike is squished by a teen-ager who rear-ends you while texting XOX to her BF you will likely get it “replaced” with one of similar value. Dealing with the errant motorist’s insurance carrier on high end, custom bikes is tricky. I’ve had a lot of experience here, and have a game plan for working with your shop, but sometimes we find that the client does “better” by getting the bike replaced through her/his homeowner’s policy. The H/O carrier then pursues the motorist, or her insurer, for reimbursement. Many people do not like using their insurance when the bike was smashed by someone else. However, they sometimes find that the fight with the other insurer isn’t worth the stress and hassle.
Auto Insurance – Medical Payments Coverage
Why would you need to take information about your automobile insurance policy on a 3 week bike ride? If you are injured in a crash with a motor vehicle you may find some financial assistance buried within your automobile insurance policy!
Your auto insurance may provide “medical payments” coverage. This coverage pays YOUR medical bills if you are in a crash with a car.
WARNING: AVOID NATIONWIDE INSURANCE for your AUTO COVERAGE IF YOU RIDE A BIKE
For several years now I have been fighting with Nationwide Insurance, trying to get Nationwide to pay Medical Payments benefits when its insureds are struck by cars while riding their bicycles. Nationwide’s standard auto policy says it will pay medical bills up to the policy limits if the insured is in a car – duh. However, in a section of the policy labeled “Covereage Extensions” Nationwide extends the Medical Payments coverage to insureds “…as pedestrians…” if they are hit by any motor vehicle or trailer.
Most auto policies have similar language. ALL insurers I have worked with, EXCEPT NATIONWIDE, pay Medical Payment benefits to cyclists who are whacked by cars. Nationwide DENIES the claims of cyclists. Why? Because a cyclist is not a “pedestrian” according to Nationwide. Nationwide takes the position that a “pedestrian” is a “person afoot” – using a definition found in the Ohio Revised Code’s Traffic Rules.
Now, Nationwide wrote the policy – and defined many of the important words it chose to use in the policy. It chose to NOT define “pedestrian.” That’s right – it didn’t incorporate the statutory definition, or ANY definition, into the policy. Then, in 2004, an Ohio appellate court ruled that the word “pedestrian,” as used in an auto policy was ambiguous. That court held that a cyclist was a “pedestrian” for auto insurance purposes. After this case, Nationwide chose to define “pedestrian”…er…. NOT. Nationwide continued to deny Med Pay claims presented by cyclists and, to this day, has chosen to not define “pedestrian.”
I have run across this problem in several cases I have had with Nationwide over the years. Each case is the same – cyclist injured in a crash caused by a motorist – cyclist incurs medical bills – cyclist presents medical bills for payment under the Med Pay provisions of the Nationwide auto policy – Nationwide denies the claim. The problem with fighting these claims via litigation, from a lawyer’s perspective, is that these are typically very small claims. Many or most people have $500 or $1000 policy limits. Some have $5,000.00, a few have $10,000.00 or more. For $500/$1000 or even $5,000.00, it typically just isn’t worth it for a lawyer to file a lawsuit and sue Nationwide over this. Further, since most lawyers may have 1 or 2 “bike cases” in an entire career, this issue does not arise often in the practice of most lawyers. Most lawyers have no reason to question Nationwide on this – I mean a woman riding a bicycle is not a “pedestrian”… right?
I sued Nationwide over this issue. I’ve handled almost 400 bike cases now, though, and this issue has arisen repeatedly in my cases. I think it is and important, and “winnable” issue which, over time, can result in hundreds of thousands of dollars of insurance benefits for Ohio cyclists.
I had a case which was being fast-tracked towards litigation. My client was a Nationwide insured. He was struck by a hit/run drunk driver. I laid out the legal argument in great detail to the Nationwide adjustor prior to the lawsuit. Nationwide denied the claim. We sued the drunk driver – and added breach of contract and bad faith claims against Nationwide. Nationwide filed a motion asking the court to throw out the claim. I filed a Motion asking the judge to rule as a matter of law that the word “pedestrian” was ambiguous and was broad enough to cover my client.
The trial court ruled in favor of my client. We WON at the trial level. Nationwide was ordered to pay the Medical Payments claim with the court holding that a “cyclist” was a “pedestrian” for auto insurance/Med Pay purposes.
The rest of the case then settled. I thought this case was in a good position, procedurally, to try to win a bigger victory at the appellate level. After reviewing the procedural issues with opposing counsel, I made some agreements which made it easier to immediately appeal the key issue – does Med Pay apply to a cyclist whacked by a car.
Right now, as of November 4, 2014, the case has been appealed, the legal briefs have been filed, and I am scheduled to appear in the appellate court in December to argue the case to a three judge panel. Hopefully, within the next 6-12 months the court will issue a favorable ruling. THAT part is up in the air.
From a business perspective, I guess this is a dumb move. A lawyer can’t make money spending dozens of hours researching an appellate brief, then making a six hour round-trip for a 15 minute oral argument on a case in which a “victory” means getting Nationwide to write a check to the client for $5,000.00.
This is an important issue to me, though. Since when do MEDICAL benefits depend on your mode of locomotion. Under Nationwide’s argument a Mom pushing a baby carriage who is hit by a car would be eligible for Med Pay, but her baby, who is not “afoot” is not? Is someone in a wheelchair eligible for Med Pay when a drunk driver veers off the road and smashes into them? Is someone sitting on a bench waiting for a bus eligible since they are not “afoot?” This makes no sense to me.
Yesterday, November 3, 2014, I received an email from a Nationwide adjustor denying the Med Pay claim – because my client was on a bicycle. This case is even “better” for the client as she was riding in a crosswalk from sidewalk to sidewalk when she was hit by a left turning motorist. She was truly behaving “as a pedestrian.” No matter… Nationwide’s position remains NO MED PAY FOR CYCLISTS!
I’ll keep you posted.
Auto Insurance – Uninsured/Underinsured Motorist Coverage
The “uninsured” [UM] part of this is obvious. If you are struck by motorist who simply has no insurance, your UM coverage should pay your injury claim just as if it was the motorist’s coverage even though you are on your bike.
The “underinsured” [UIM] may not be so obvious. If the motorist who hit you has “some” coverage, but not enough to pay the full value of your claim, your policy’s “UIM” coverage may be used to pay more towards your claim depending on your policy limits.
I advise my cycling clients to buy as much “UM/UIM” coverage as they can afford. It protects YOU in the event you are injured by an errant motorist.
Be wary of arguments similar to those raised by Nationwide – i.e., that cyclists are not covered by auto insurance. I have not encountered this argument here in Ohio – particularly since 2004 when an Ohio appellate court ruled that cyclists were covered. In today’s “Let’s Not Pay Claims” word in which insurance companies live, I would not be surprised to see it raised again…
Are you carrying an Umbrella?
Do you carry any type of excess or umbrella insurance? NO, not a policy to replace your cheap umbrella after a storm. These types of policies are designed to fit over the top of all other policies and only come into play when all other available insurance is used up and you still have losses. An umbrella policy is usually written with large policy limits – often $1,000,000 or more. The carrier writing the umbrella usually requires significant underlying coverage – usually $250,000.00 or more.
Play the “What If” game for a minute – What If you are killed by an uninsured, or underinsured motorist. What would happen to your family, financially. What if you are rendered incompetent – or unconscious. Are you a small business owner? What would happen to your dental practice – or your bakery –if you are taken out on a bike ride? How much money would your family need to be covered sufficiently.
I advise ALL bike riding clients to consider an umbrella policy. These are typically very inexpensive policies and, in that once-in-a-lifetime situation, can save your financial life! The more you have to LOSE the more you NEED a high level of insurance protection!
WARNING – When you get your umbrella, make sure it WORKS when you NEED IT! In one case I handled, the client, [a CPA married to a CPA], bought an umbrella policy. They signed a bunch of forms when the insurance agent they dealt with presented the coverage. A couple years later the client was struck by an errant motorist and suffered severe injuries. The motorist had very low policy limits. The value of the claim exceeded even the relatively high coverage UM/UIM limits the client carried. Thankfully, I thought, the client had this $2.0 million Umbrella.
Unfortunately, when we dug into it, it turned out that the agent thought the client did not want the Umbrella to apply to the client’s AUTO policy – and used it more as a device to protect the client’s home and business. He had the client sign forms which caused the Umbrella to not apply to the auto coverage. The client didn’t realize what she was signing away. Unlike the doctor in my prior example, this client was left with a claim that exceeded her UM/UIM policy limits but had no place to turn to have the claim paid.
The bottom line, explain to your insurance professional what you want – and what risks you are guarding against. READ the stuff they ask you to sign. Make sure you understand the ramifications of any policy exclusions or limitations.
Disability Insurance – Covering the REAL Risk
Everyone knows about life insurance. However, the overall risk that you will be disabled is actually considerably higher than the risk of being killed. This risk evens out as you age. In one report I read, the likelihood of becoming disabled 4 times greater than being killed at age 30, 2.7 times greater at age 40. By age 55, becoming disabled was still 1.5 times more likely than dying. While deaths from cancer, heart disease and stroke have actually gone down, the risk of becoming DISABLED from one of these “Big Three” has climbed. So folks are surviving stuff that used to kill them – but are still becoming disabled.
On a bicycle, you are far more likely to be injured, and possibly disabled, than killed. In Ohio each year there are 1600-2000 bike crashes. Cyclists are injured in 70+% or so of those crashes. However, they are killed in less than 1% of the crashes. While “severe” injuries are not as likely as relatively “minor” injuries, the risk is there when you are dancing with two ton partners…
The bottom line – Disabilty Insurance is another product which every serious road cyclist should consider. As with life insurance, the more you stand to lose the more important this coverage is!
Real Life Insurance Example
My client, a physician who rides all the time, suffered a dangerous neck fracture in a crash caused by a motorist. The motorist carried Ohio’s paltry state minimum auto coverage – then $12,500.00. The client’s medical bills were in excess of $80,000.00and his wage loss was over $40,000.00.
Fortunately, the cyclist had $300,000.00 “underinsured motorist” coverage and $10,000.00 in “medical payments” coverage. We used the medical payments coverage to cover the “co-pays” the client incurred for his neck surgery and other treatment.
The doctor also maintained an excellent disability insurance policy that kept him afloat financially while he was off work. Finally, he had an umbrella policy with $1.0 million limits. Since the value of his claim exceeded the $300,000.00 “UM/UIM” limits, his “umbrella” was available to pay the balance and we were able to reach a reasonable settlement that was satisfactory to the client without filing a lawsuit. From an insurance perspective, the good doctor knew the risks and took appropriate steps to make sure he was well-prepared for the “once-in-a-lifetime event” that came out of the blue during a short post-dinner ride through the neighborhood!
NEW STUFF – “BICYCLE INSURANCE”
In just the past few years we have seen a brand new type of insurance product hit the market- something called “bicycle insurance.” A few insurance companies are recognizing that cyclists both have some special needs and likely have some extra cash and are willing to protect those special needs.
Take the cyclist who has given up his or her car. By not having a car, and not having auto insurance, the cyclist loses two of the most critical types of insurance coverage – UM/UIM and “Med Pay.” Some bicycle insurance policies are designed to substitute for Med Pay and/or UM/UIM. Velosurance provides a wide range of insurance products for the cyclist. Markel works with USA Cycling. Here’s one in Portland. Spoke Insurance is another carrier which is supposed to be providing similar products in the future.
I do NOT “vouch” for any of these carriers. I have not reviewed the policies and have not sued them … yet … :^) …
PART II – ESTATE PLANNING FOR THE TOURING CYCLIST
Why does the bicyclist need to worry about “Estate Planning?” What the heck IS “Estate Planning” anyway? Sounds rather vague and morbid – something for rich people!
“Estate Planning” for most of us [us NON-millionaires, that is] generally consists of having a will prepared, as well as possibly a trust. Even more important for the bicyclist, “advanced directives” should also be prepared.
Most people want their estate plan to provide financially for their surviving spouse, protect their assets, insure that their children are physically and financially cared for, minimize cost & taxes, and “avoid probate.” Other goals may include providing for children of a prior marriage, making sure that business interests are taken care of, providing liquidity to pay bills and taxes and avoiding family conflict and strife! “Advanced directives” are prepared in case you become unconscious or unable to make your own decisions.
Here’s a little “12-Step” program for getting the BLS of Estate Planning done in YOUR life!
1. Have a will prepared.
2. Consider whether a trust is necessary.
3. Have health care directives prepared.
4. Execute a financial power of attorney.
5. Get ALL Financial Stuff In One Folder/Binder – ORGANIZE IT
6. File beneficiary forms.
7. Consider life insurance.
8. Understand estate taxes.
9. Cover funeral expenses.
10. Make final arrangements.
11. Protect your business.
12. Store your documents.
YOUR WILL & TRUST
I think many adults fear “making a will” more than death or dealing with a life insurance agent! The thought of talking about “end of life” issues scares many people and prevents them from getting their will done. However, the legal effect of NOT dealing with these issues should scare you even more!
Everybody Needs a Will
“Intestate Succession” sounds like some sort of goofy bowel obstruction. In reality, it is a law which carefully explains exactly who gets your property if you fail to have a will. Yes, the court will give away your stuff in, quite possibly, a manner which you would not want. You solve that be making a will.
In a simple will, you state who you want to inherit your property. You also name a guardian to care for your young children should something happen to you and the other parent. If you have minor children you should have a will – no question about it – you are committing “Parental Malpractice” if you don’t!
If you and your spouse fail to have a will not only are you bound by the law of “Intestate Succession” but, typically, the Probate Court Judge determines who will take care of your young [under 18 year old] children until they are 18 years old! Without a will, most state laws give your young children possession of your entire estate, including all life insurance proceeds and such, at age18, if you and your spouse die, say, on a bike trip. If only one dies, your children usually inherit part of your property while the surviving spouse gets the rest. In the case of a 2nd marriage, step-children and the like, it gets more complicated – and the consequences are more severe.
Failure to have a will or trust prepared can cause your estate to incur taxes of expenses which could be avoided. If you fail to follow these rules exactly, your wishes may be ignored by the Court.
Get your Legal Act Together- and Make A Will!
Trusts: Not Just For Millionaires
A Trust is also a legal document. In one simple form, a trust can hold your assets until your children reach an age at which you feel they can handle the assets with appropriate care. Giving the proceeds of a half-million dollar life insurance policy to a newly turned 18 year old is a scary thought!
Trusts can be very simple or very complex and can be extremely diverse in what they do. Discuss whether a trust is right for your situation with your estate planning professional!
POWERS OF ATTORNEY
What are POA’s?
A Power of Attorney [“POA”] is a legal document that gives someone ELSE the power to make decisions for you when you cannot. POA’s are of CRITICAL importance to the bicyclist
A financial POA, gives the person of your choice the power to access your bank accounts, pay your bills or do anything else financially that YOU could do.
The financial POA must be signed when you are competent. If a crash renders you unable to make financial decisions, it is too late to create a POA – your assets may be frozen, unavailable to your spouse or family, and your bills might go unpaid or your credit could be damaged.
The Schiavo Case & “Advanced Directives” in Estate Planning
The Terry Schiavo case was a real medical and legal wake-up call for many Americans. Terry Schiavo was a young woman in a coma. She was not “terminal” but had never prepared written instructions advising health care providers how she wanted to be treated. The public battle between her husband and her parents caused many states to pass laws permitting or formalizing such “advanced directives.”
A “Power of Attorney for Health Care” is a legal document that authorizes another person of your choosing to make health care decisions for you if you are unable to make informed decisions on your own. A “Living Will” is a document that contains your written wishes and instructions for care at the end of life. You can state your preferences regarding aggressive life-prolonging treatment.
These documents are often codified. In Ohio, the Ohio State Bar Association has made it easy – you can get the entire package here. The OSBA also helps folks create financial POA’s,w which are defined by statute in Ohio. You can read up on POA’s here.
Your should definitely have these “advanced directives” in your estate planning package BEFORE you leave for your next bike ride!!
Every touring cyclist needs to consider the BLS right away! Pack your insurance and emergency contact information in your panniers and your phone, as well as copies of your will & advanced directives, for any extended cycling trip. I guarantee that you will sleep better in that hot, sticky tent you set up in rain!
Good Luck & Good Riding!