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'Pedalounge' party bike stalled due to insurance, permit issues

Posted by Jonathan Maus (Publisher/Editor) on August 4th, 2011 at 12:23 pm

The Pedalounge on a trial run
down N. Mississippi Avenue.
(Photo: Pedalounge)

Back in April I shared the news that a 16-person party-bike dubbed the "Pedalounge" was all set to hit the streets of Portland. Well, it turns out that the business is on hold due a City permitting issue related to liability insurance.

Portland Pedalounge owner John Boblett is frustrated because he cannot get insurance due to what he feels is a problem with the City of Portland's permit requirements. The City says it's just protecting taxpayers from liability if anything goes wrong.

Boblett aired his grievances via testimony to City Council yesterday. "I envision my Pedalounge as becoming one of Portland's Signature Attractions; on the short list of must-things to do here in this City," Boblett shared.

"If the insurance industry itself classifies this as a high risk activity that's even more reason to have these requirements in place."
— Kathleen Butler, City of Portland Revenue Bureau

Boblett says he's been working hard to obtain a business permit but is no at an "impasse" over an issue known in technical terms as the "additional insured endorsement."

In short, the City of Portland requires that all for-profit business operating in the public right-of-way have insurance that puts all liability for accidents on the business owner. Boblett says his carrier has declined to issue him insurance specifically because his agent feels the City's language is too broad. According to Boblett's agent, the language includes a stipulation that Boblett would be liable in an accident even if failing City infrastructure was the cause.

"My insurer does not believe it is in their best interest, or fair and equitable, to be held liable for an incident that is determined to be caused by a defect in Portland's infrastructure," reads Boblett's statement to City Council.

As an example, Boblett shared this scenario:

During a Tour with a group - we hit a pothole. A guest falls from the bike and is injured. Portland says I should have avoided that pothole. The insurer says they will not be held liable for the City not maintaining its streets.

Boblett says his insurer covers 18 similar businesses throughout the country, but they can't get a permit from Portland.

City of Portland Revenue Bureau Regulatory Division Manager Kathleen Butler tells me they're just looking out for taxpayers and that there must be some confusion with the permit requirements. "There's no specific language about potholes or infrastructure in our permit requirements. It's all standard language" she told me via telephone today. (City Code 16.40.410 "LPT [Limited Passenger Transportation] and Taxi Insurance Requirements" makes no mention of infrastructure upkeep.)

Butler confirmed that they've gotten three requests for party-bike operator permits recently. Because of this interest and the fact that the vehicles are new to Portland, the Revenue Bureau has assembled a working group with representatives from the Police Bureau and Liquor Control to learn more about them. Butler said she also has insurance experts on her staff who are looking into the problem.

Butler herself says she would be happy to issue the permit if Boblett could get insured. Curious as to why he was having trouble getting a policy, Butler called a insurance agent who covers some local pedicab operators. "I asked if they covered these pedal lounges, and they said, 'no'." When Butler asked why, the company said they consider the party bikes "too much of a risk" because the seats have no backs on them and the passengers aren't secured. In addition, the operators either serve alcohol or do bar tours — both of which they say increases the risk of someone falling off the vehicle.

"If the insurance industry itself classifies this as a high risk activity that's even more reason to have these requirements in place," says Butler.

[Note: The person operating the Pedalounge does not drink and is solely responsible for the steering.]

What about the successful party bike operating in Bend? "Bend is much smaller place," Butler explains, "These vehicles in Portland will be running in traffic that will be intense at times."

She added that her staff is doing research on how larger cities are dealing with these types of vehicles.

In the mean time, Boblett will just have to wait until either he can find insurance coverage that meets the City's permit requirements, or the City changes their requirements (not likely to happen).

Boblett says 18 other cities across America already have party-bikes like his in operation and "It would be a shame if Portland was absent from that group."

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Comments
  • Jon August 4, 2011 at 12:32 pm

    I want to see these bikes but I'm with Portland on this, the city shouldnt be responsible over an injury due to a pothole.

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    • Nick V August 4, 2011 at 12:42 pm

      I agree, especially if these groups are going to be drinking. A "party bike" in the middle of traffic on Portland roads would seem to be a concept that is asking for trouble.

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    • Spiffy August 4, 2011 at 12:48 pm

      exactly... I've never heard of an insurance company that will take responsibility for you hitting a stationary object... I hit a car wheel in the road that was covered in snow and the city just laughed at me... my own fault for going to fast in conditions I couldn't see the road in... so yes, he needs to avoid potholes...

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  • doug August 4, 2011 at 12:57 pm

    Insurance looks at frequency and severity of an adverse event. The fact that you can pile a whole bunch of people onto it, then travel on a busy street would certain increase the risk that an event leads to a very large financial loss due to the number of passengers.

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  • BURR August 4, 2011 at 1:00 pm

    If you brought this subject up in almost any European country, you would be laughed right out of the room.

    I went on organized bike tours in Paris and Barcelona that served alcohol, and didn't require either signing a waiver or a helmet; they were basically ride at your own risk.

    Americans are way too concerned with insurance and liability issues, and I blame the lawyers.

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    • single track August 4, 2011 at 1:15 pm

      effing litigiosity! its ruining our country! Let the party bike roll!

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    • Natalie August 4, 2011 at 3:28 pm

      I think an important aspect of this discussion is American society's perverse obsession with suing governments and businesses over every little thing. A party bike might fly in Europe, but they also don't have selfish people suing McDonalds for their weight problems and blaming their homicide on twinkies. It's a shame that we can't have one of these awesome bikes in Portland (yet)--I saw it the other day and it looked so fun--but these insurance companies probably have a lot of data backing up their decision. If you ask me, the real problem is that if someone fell off of a party bike that they would (and you know a good chunk of people would do this) sue the city (i.e. taxpayers) for a million dollars. It's just sad.

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      • BURR August 4, 2011 at 3:31 pm

        If someone fell off a party bike they would probably sue the party bike company, and not the city.

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        • R. Sewell August 4, 2011 at 3:43 pm

          Actually, they would probably sue both the party bike company, the city, and possibly the other passengers on the bike at the time.

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          • Scott August 6, 2011 at 8:06 am

            And don't forget the party bike manufacturer, the brewery that made the beer, the engineer who designed the road, anyone in the immediate vicinity, Bugs Bunny ...

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  • Canuck August 4, 2011 at 1:02 pm

    And this is a surprise?

    Mixing drinking with any vehicle on the road, where those drinking have control of the vehicle, is just plain wrong.

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    • BURR August 4, 2011 at 1:05 pm

      those drinking do not have control of the vehicle, the operator does. Those drinking only provide power.

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      • Nick V August 4, 2011 at 1:14 pm

        But if the customers are drunk and thus have lower coordination and reaction skills, what's keeping them from falling off or doing something else unwise?

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        • R. Sewell August 4, 2011 at 3:46 pm

          The same thing that keep drunk patrons exiting a bar from falling down, doing something unwise, or, let's say, walking into the traffic drag-racing down 2nd Ave after exiting Baracuda: nothing.

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    • whyat August 4, 2011 at 1:07 pm

      The driver is completely sober (and is the business owner).

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    • Lance P. August 4, 2011 at 1:11 pm

      the participants do not have control of the vehicle. They only supply power. The 'driver' has the option to use it or not.

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    • meh August 4, 2011 at 2:25 pm

      And a bunch of drunks decide they don't want to pedal anymore leaving the thing in the road and a hazard.

      How much control does the driver have at that point?

      This is why the whole thing is a major liability on the streets.

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  • Lance P. August 4, 2011 at 1:10 pm

    As someone that has worked in the insurance business I would like to add that it is common for a legal agreement to be created that will put liability onto the participant. This will meet both the cities and the insurances guidelines. Basically, have each participant sign a waver. It will need to written up by a lawyer (Mark J. Ginsberg?) who can communicate between the city and the insurance company. I'm sure a few things can be changed to make this work out.

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    • Chris I August 4, 2011 at 1:43 pm

      This is probably the best solution. The waiver essentially returns the situation to what it should be: if your drunk ass falls off a bike bar, it's nobody's fault but your own.

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      • Natalie August 4, 2011 at 3:33 pm

        Agreed, that sounds pretty reasonable to me. Although, it's pretty frustrating when you want to do something fun and you first have to sign something that essentially says "no matter what happens, even if it's your fault, i agree not to sue if i'm injured, and if i die my relatives can't sue you either"-- that stuff is always kinda creepy.

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    • q`Tzal August 4, 2011 at 7:19 pm

      Do you have to be sober for this waiver to be legally binding?

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  • Alan 1.0 August 4, 2011 at 1:24 pm

    So, as I read it, if the seats had backs and belts, at least one insurer would write the policy. What does Boblett say about adding seat backs and belts?

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  • DT August 4, 2011 at 1:42 pm

    I saw one of these pedaling down NW 13th Ave last week. It was quite the spectacle.

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    • laura August 4, 2011 at 4:23 pm

      There was one modified for aquatic use in The Big Float last weekend. It was a riot to watch!

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    • Jon August 4, 2011 at 8:06 pm

      were they drinking on it? or solely riding it?

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  • Glen Bolen August 4, 2011 at 1:56 pm

    I rode the one in Bend (www.cyclepub.com) It was a lot of fun. Shame on us if we don't allow it in Portland.

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  • aaronf August 4, 2011 at 7:11 pm

    I can't imagine purchasing a "pedalounge" without calling around about insuring it first. That's part of having a business plan. Especially for something that doesn't exist yet.

    The first thing I thought when I originally heard about the pedalounge was "Good luck with the OLCC!" I wonder if he has been able to get a license from them yet.

    It sounds like the city is doing a pretty good job here of investigating the issue. How often do 3 departments coordinate to research an issue?

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    • Glen Bolen August 5, 2011 at 10:05 am

      on the OLCC issue, the owner of cyclepub in bend told me that he operates sort of like a limo. customers bring their own beer or wine (no hard stuff) and they have to keep the beverages in the vehicle when they park.

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  • Lounge Master John August 4, 2011 at 11:43 pm

    To clarify a few things...I do have great insurance. It's the same company that insures all other similar bikes (18) around the country. This insurer has never had claim from any of these clients. If the City came to me and said "Put backs on the seats and install seat belts" I would have it done that afternoon. Regarding the OLCC, they were my first call. As long as I'm not pouring, selling, distributing etc., they are not involved very much. Their major concern is licensing.

    The pothole analogy actually came from Kathleen Butler herself. She was illustrating that the City is to be held harmless in any event. Of course I should avoid the pothole. What if it's a sinkhole and we all disappear 20 feet down? The City says because that occurred while I was out doing a Tour making money from using City streets, that liability is mine. Portland wants as much protection as possible and I think that's fine. My problem is that there is only one first class insurer that covers these bikes and they cover them by
    issuing insurance based on the fact that I'm doing a Tour. A closed loop tour. I'm not trolling the streets looking for passengers or doing any kind of pick up and drop off. The only time I'm out on the street is when I have booked a tour. That enables me to get great insurance for a fair price. Portland City Code has lumped the Pedalounge in with taxi cabs, pedicabs and other businesses with a completely different model. When I take my business into that model I cannot get good, affordable insurance. But I may be forced there anyway.

    I admit that when I first saw these bikes I had similar
    concerns about mixing drinking with pedaling. That was three years ago and now I know it can be done
    safely and responsibly. I wouldn't do this if I thought people were going to get hurt. I am not a greedy person who puts his own bank account above the safety of his riders. This is being done tonight in Tucson, Denver, Nashville, Savannah, Minneapolis, Chicago, Milwaukee, Austin, Houston, Lawrence Kansas, Kansas City, Madison Wisconsin and more joining all the time.

    Portland wants to keep its streets safe. That's a good idea. I want to run a small business that is
    an absolute pleasure to participate in. It has been
    proven over and over that this works very well when it's run well.

    I have a Waiver of Liability that all riders must sign.
    My insurer demands it and makes my guests perk up their ears when I go over the Rules for staying safe on the bike. It's like the back of a ski ticket. If you insist on doing something stupid, you can get hurt and you shouldn't blame someone else for it.

    Oh my God! i just looked at the clock. I gotta go to bed.

    John

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  • Paul Tay August 5, 2011 at 1:02 am

    aaronf
    I can't imagine purchasing a "pedalounge" without calling around about insuring it first. That's part of having a business plan. Especially for something that doesn't exist yet.
    The first thing I thought when I originally heard about the pedalounge was "Good luck with the OLCC!" I wonder if he has been able to get a license from them yet.
    It sounds like the city is doing a pretty good job here of investigating the issue. How often do 3 departments coordinate to research an issue?
    Like or Dislike: 0  0

    Maybe they should just do lemonade? Naaaaaaaaaaaaaaaaaah. Bong hits for Jesus, anyone?

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  • Mary August 5, 2011 at 3:35 am

    We have some (I think it's three now) of these in Minneapolis, and we've ridden them at demonstration events but haven't rented them. Their maximum speed is something like 4 or 5 mph. They haven't been given permits for any route that has much traffic on it, and our Parks department hasn't allowed them to use the bike paths. They are Dutch in origin and are known there as Fietscafe.

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  • Dave Reid August 5, 2011 at 7:23 am

    Here in Milwaukee, WI the Pedal Tavern has been operating for 1 or 2 years now... Actually added a second bike.... It can be worked out, and well was a lot of fun!

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  • Andrew Holtz August 5, 2011 at 9:52 am

    There was one of these pedal vehicles at the Lucky Lab on NW Quimby last Sunday. It picked up a group and headed off down the street. It looked a bit different than the pictures here. Is there another company already doing this sort of pub bike crawl?

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  • Lounge Master John August 5, 2011 at 10:53 am

    There are three similar businesses in Portland right now. My Pedalounge, plus the Brew Cycle and the Cycle Saloon.

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  • Andrew Holtz August 5, 2011 at 12:34 pm

    Maybe I didn't read the article or all the comments closely enough. If two other similar pedal vehicles are operating in Portland now, I don't understand the problem. How did they overcome the permit and insurance issues? If they did it, what's the hold up with Pedalounge. Something in all this just doesn't make sense to me.

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  • Lounge Master John August 5, 2011 at 4:00 pm

    All three bikes are allowed to give free promotional tours. No payment, no tipping, no back rubs. No compensation. The permit we are seeking comes into play when we use our city streets to generate income. So as long as we're not making any dough, we can provide tours. If I win the Powerball I'll just give free tours and will never need a permit. Does this sound a little crazy?

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  • Aaronf August 6, 2011 at 5:30 pm

    It doesn't sound that crazy. In America many activities aren't regulated until they are involved in commerce. Hopefully you can make your case to the city and get cheaper insurance. Good luck, Lounge Master.

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  • jim August 6, 2011 at 11:04 pm

    I just cant imagine 12 drunks sitting on barstools swerving around in traffic would ever be allowed on a public street. perhaps if they wore lanyards, so if they did fall they would just dangle. As far as airbags I can see 12 on there right now

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  • Lounge Master John August 6, 2011 at 11:11 pm

    Thanks Aaronf,

    What's a little crazy to me is Portland saying this is unsafe, but only if I'm making money. As long as I'm not taking dollars I can go out and have fun with my guests. On a different note…I have talked with more great Portlanders in the last month than I can count. This City is filled with smart and ingenious and good people. In spite of my current situation, I feel lucky that I live here.

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  • aaronf August 7, 2011 at 9:38 am

    John, I agree that it seems a little crazy. Maybe it will make you feel better to know that many federally regulated industries operate the exact same way.

    1) If I drive a charter bus around and charge my customers for the ride, I need to jump through a lot of hoops to comply with regulations. If I drive it around for free (church retreat) I jump through almost no hoops.

    2) If I haul a barrel of hydrofluoric acid to my business I have a ton of hoops... but for my hobby, which happens to involve very dangerous chemicals, I'm basically unregulated.

    3) Why do people get to drive those huge RVs around that should require a class B CDL? Not in commercial business. Take the same RV and use it for a booth at trade shows... then you need the CDL, a documented maintenance program, pre-employment drug tests for anyone who drives the RV and so on.

    So, I hope this makes you feel better. Many (most?) regulatory agencies operate this way. I have been offered many different rationales, and if you ask around, you probably will too.

    I'm hopeful/optimistic that you will be able to get set up under the tour-type insurance, eventually. You're a pioneer here in PDX, so I'm not surprised that the city might have misunderstood your type of operation (since they are classing you with pedicabs) and it might take 40 phone calls to get everything sorted out.

    The alternative would be a city where I can go in and say "Hey, I want to start a business in Portland where I do XYZ. Nobody has ever done it here before, but I have another business in Flagstaff that does just great."

    Personally, I would hope that the city would look into it first. What's good in 16 other cities might not be good in Portland. These are the types of decisions that cities/states still get to make, even though (I think) it hampers businesses sometimes.

    Good luck!

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  • n8m August 8, 2011 at 12:05 am

    Wow, If i saw a party/bar bike cruise through my hood (esp if it had a trailer w/ racks to put ones own bike) - it would have my biz for sure. Portland is the Queen of beer & bikes in this country. Its time to put the two together. Keep up the good fight Lounge Master.

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  • Erik August 23, 2011 at 5:13 pm

    It seems like I just saw this bike on Saturday on N Williams leaving Vandetta and doing a bar crawl. Perhaps it was a competitor, or maybe he got his permit/insurance straightend out?

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  • Lounge Master John August 24, 2011 at 12:41 pm

    Yes the Pedalounge was out this last Saturday at High Noon. We went to Hopworks, Vendetta and Prost! Lots of fun! That voyage was 'on the house'. The Pedalounge can take folks on Tours in Portland - as long as the owner doesn't receive any compensation. No pay, no tips no back rubs. Not a great model for a small business. But it's a shame to let this bike wither away in a dark garage. So we go out from time to time to stretch our legs.

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