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‘Pedalounge’ party bike stalled due to insurance, permit issues

Posted by 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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Jon
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Jon

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.

doug
Guest
doug

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.

BURR
Guest
BURR

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.

Canuck
Guest
Canuck

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.

Lance P.
Guest

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.

Alan 1.0
Guest
Alan 1.0

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?

DT
Guest
DT

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

Glen Bolen
Guest
Glen Bolen

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.

aaronf
Guest
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?

Lounge Master John
Guest

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

Paul Tay
Guest
Paul Tay

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?

Mary
Guest
Mary

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.

Dave Reid
Guest

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!

Andrew Holtz
Guest

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?

Lounge Master John
Guest

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

Andrew Holtz
Guest

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.

Lounge Master John
Guest

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?

Aaronf
Guest
Aaronf

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.

jim
Guest
jim

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

Lounge Master John
Guest

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.

aaronf
Guest
aaronf

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!

n8m
Guest
n8m

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.

Erik
Guest
Erik

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?

Lounge Master John
Guest

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.