Bike Shop Risk Management Concerns -Part 4

Part 4 of a 6 Part Series

This series is specifically aimed at the needs of Bike Shops, however much of it holds true for many other sport-related businesses. The first five articles are written by Scott Chapin has 15 years of experience in insurance and specializes in insurance for Bike Shops.  He is with RJF,
a Marsh & McLennan Agency LLC company located in Minneapolis.

Frostbike 2012 Ramblings[1]

by Scott Chapin

RJF, A Marsh & McLennan Agency LLC Company


Last weekend I spoke to over 100 bicycle dealers while working the RJF booth at Frostbike, the annual trade show held at QBP’s corporate headquarters in Bloomington, Minn. Of course, given what I do for a living, many of these conversations were about the insurance coverage specifics we provide through our retail bicycle shop insurance program.

It’s amazing how many people are now aware of “voluntary property departure” (insurance lingo for someone stealing your bike when you let them demo it). Some, unfortunately, have found out the hard way. In technical terms, voluntary property departure is a coverage designed to protect shops against “Trickery and Deceit” (more insurance lingo). Historically, it was a coverage form auto dealers used to protect from a situation where someone provides fake ID and/or credit card, test drive a car and never see them again. That wasn’t covered under the insurance protection for theft because the car was voluntarily given to the “thief.”

Sadly, bike shops get burned with this A LOT!!! I suspect 40-percent of the people I spoke with at Frostbike had it happen to them. Most insurance carriers do not cover this and the bike shop ends up absorbing the loss. I even heard a story about a gentleman who showed up in his cycling gear driving a nice new Toyota truck. The shop owner asked for ID and credit card. The guy said “I don’t have those, as I just finished a ride. Take the keys to my truck.”  Guess what? The truck was stolen! He took off with a $8,000 tri-bike, and the shop owner was stuck with the loss.

I heard many other shop owners tell me they stopped doing weekly shop-sponsored rides because they are concerned about their liability. They were excited to hear we offered coverage for this. This is the great part about my job: Providing a product that allows for people to run their business the way they want while promoting the sports they love. How great is that?

Other hot topics from Frostbike:

  • The mild winter has either kept shops busy due to increase in repairs (people are still riding)
  • Fat Bike sales are down due to a lack of snow, though it really depends on the geographic region.

But the question of the day at Frostbike was all about weather. The odd-weather patterns have caused a lot of unpredictability in sales. No one really knows how this will play out in a couple months. Will it help or hurt sales???

[1] This article originally appeared on Scott’s website

Photo Credit: Richard Masoner / Cyclelicious