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Old 08-14-14, 12:21 PM   #1
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Bike charity - insurance question

I fix up unwanted bikes and give them away through local charities like the local soup kitchen and local Boys and Girls club. I give every bike a tune up and some get extensive work like new wheels, cables, etc. Generally this means striping the bikes of all parts and rebuilding, greasing what is tight and tightening what is loose.

I am a one guy operation, self-funded, just trying to help folks out who are going through a tough time or might need a helping hand. A bike might mean the difference for someone of being able to get to work or not, or it gets a kid a bike who might otherwise never get a chance to ride.

Lately I have run into a question of liability, i.e. what happens if someone is hurt riding on one of the bikes that I worked on? I do not give the bikes directly but I give them to the charity and they hand them out. It is all on an “as is” basis and no guarantee or warrantee is made by either me or the charity. I know that the charities have liability insurance but that does not or may not cover me. I am concerned that if someone is hurt on one of the bikes I worked on that some ambulance chaser will see a lawsuit at my expense.

I talked to my homeowner’s insurance company to see if my existing insurance would cover me or if I can get an umbrella policy. Their response was no, that I needed “products and completed operations” coverage. They did direct me to a local agency, but they are having a tough time getting a quote.

Is there anyone else out there doing anything similar? Do you have liability coverage? Can you let me know what insurance company issues your insurance? Any other suggestions?

Anyone interested can find out more about my operation by going to Let's Put People On Bikes: Home

PS - Moderators, please feel free to move if this is not the appropriate forum.
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Old 08-14-14, 12:49 PM   #2
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Of course anybody can sue anybody at ant time for any reason, or for no reason.

But odds favor you greatly. You're not running a business or taking money so there's no implied contract or contractual implied warranty. It's an as is kind of deal, and you're further removed by the charity you donate to.

It's like selling an as-is used car, and a month later the wheel falls off causing an accident. I don't know of any cases where the buyer could make a claim against a private seller.

If implied warranty or product defect claims could be pressed against donors of merchandise, gifts to charities could fall to near zero. So while you have no express or ironclad protection (see opening sentence) the law recognizes the social benefit of protecting donors. This doesn't mean that you needn't practice reasonable care and due diligence, but unless knowingly and with intent to cause injury, you're pretty safe.
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Old 08-14-14, 01:00 PM   #3
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When you became an organization, your HO coverage ended. The organization needs the Product liability coverage, and you would likely be classified as a bike shop for that purpose. As an individual, if you fix up a bike and give it to someone and they are hurt, or if you fix someone else's bike for them and they are hurt, your HO coverage should cover you, so long as it is not as part of a commercial operation. Because you are doing this as part of an organization, I would tend to agree that you need commercial coverage. The downside of this, is that it's not cheap.
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Old 08-14-14, 01:08 PM   #4
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Unless you are a millionaire jerk that everyone wants to sue, chances are that anyone who brought that claim, "charity bike build negligence", into an attorney's office would be laughed out into the street. It's a little different when you pay a premium at a LBS to do competent service or repairs, and then you face plant riding your bike home. Simple solution, ask the charity who you are donating to to give you an indemnity letter that they'll step into your shoes if someone sues.
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Old 08-15-14, 10:05 AM   #5
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I sent a PM about a person who might have knowledge in this area.

If you are not your own charity (whether formally organized or informal.... ie you just call yourself something) it would seem that the liability is would be no different than if you just donated a bike gathering dust in your garage......but liability does not always seem logical.

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Old 08-15-14, 02:07 PM   #6
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A few clarifying questions --

Do you accept any sort of financial support for your activities?

Do you gain anything from this? Donations (money, bikes, or parts)? Advertising or good will for some other business operation?

Do you have any formal organization behind that name, or is it really just you in your spare time?

I would suggest reading very carefully the actual text of the exclusions on the personal liability coverage of your homeowners insurance, and trying to determine whether a reasonable person would think you fall into that exclusion.

Without seeing your insurance policy or knowing anything more than what you said here, I would think there's a reasonable chance that you are not engaged in an activity that would be excluded from most homeowners policies. But I'm not your insurance agent or an attorney.
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