Phillips Law Firm Blog

Prior to 1986, your company, Southern Platers, Incorporated (Southern) operated a chrome plating facility in Tampa, Florida. You used tetrachloroethylene, commonly referred to as perchlorethylene or "perc" as a solvent to degrease parts at your facility before switching to unchlorinated solvents. The main perc supply at the site was held in a one thousand gallon above ground storage tank. The perc at the site would be transferred to 55-gallon drums on site, which were moved around at the site using forklifts.

In early 1988, your local environmental enforcement agency found large levels of PERC contamination in the site's groundwater. You immediately hired an environmental engineering company to test for contamination. Tests coupled with a review of records and further investigation revealed that four PERC releases had occurred at the site: in September 1978, a truck backed into and ruptured a 55-gallon drum of perc on a loading dock. This incident caused about 30 gallons of perc to be released into the soil at the plant. In August 1982, a 55-gallon drum of perc was pierced with the fork on a fork lift and approximately twenty gallons of perc spilled into the soil. In July of 1983, a transfer hose ruptured while filling a 55-gallon drum from the above ground storage tank spilling about ten gallons of perc. Then came the release that caused your company to stop using perc altogether. In May of 1985, while transfering a 55-gallon drum of perc from the storage tank, a forklift operator pierced the side of the perc storage tank just four inches from the bottom. Nearly eight hundred gallons of perc spilled into the soil. It is estimated that your company recovered less than half of the spilled perc.

After the initial determination that a large amount of perc had to be remediated from the soil and groundwater, your company entered into a consent order with the Florida Department of Environmental Regulation in August 1994 to remediate the perc contaminated soil and groundwater. However, the cost of the remediation is expected to cost millions. You would like to shift the cost over to your insurance carriers, if possible, but you are unsure of whether or not your insurance companies are required to provide coverage under these circumstances.

After weeks and months of searching through old boxes of records, your company finally locates two insurance policies that were applicable to your business at the time of the perc spills. At the time of the spills, your company held comprehensive general liability ("CGL") insurance under Old Hampshire Insurance Company, and occurrence-based umbrella liability insurance under Total Insurance Company ("Total"). You notified Old Hampshire of the environmental situation and asked that each accept responsibility for the environmental contamination. Both insurance companies refused to defend or indemnify your company. You expected that there was nothing that could be done. "If the insurance company won't pay, the insurance company won't pay," you said to your self.

However, just to be certain, you decided to ask your attorney if there exists any right to appeal an insurance company holding on this case. Your attorney reviews your old insurance policies that you fortunately found in your files and advises you that no coverage was provided for pollution unless the pollution was "sudden and accidental." However, your attorney advises you that the area of insurance coverage for environmental liability is still an unsettled area of the law. After reviewing the facts behind the four perc releases at your facility, and after reviewing your insurance policies in detail, your attorney advises you that the four identified perc releases were "sudden and accidental" under your policy. As a "sudden and accidental" occurrence, your company is entitled to collect its damages from the insurance company. You ask your attorney to explain.

Your attorney explains that your insurance companies define the term "occurrence," "sudden and accidental" and "pollution exclusion" as follows:

This "occurrence-based" policy defines the term "occurrence as:

an accident which takes place during the policy period, or that portion within the policy period of a continuous or repeated exposure to conditions, which causes personal injury, property damage ... neither expected nor intended by the insured.

The policy's pollution exclusion clause provides:

It is agreed that this policy does not apply to ... property damage arising out of the discharge, dispersal, release or escape of smoke, vapors ... toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land ...; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.

Your attorney advises you that your insurance company does not deny that the four identified releases were sudden and accidental. However, the insurance company denies liability for the ongoing release of perc into the soil and groundwater that occurred for years after the sudden and accidental release. According to the insurance company's philosophy, the ongoing release, which of course caused most of the environmental harm, is not a covered event since the on going release lost its character as "sudden and accidental."

However, it is your attorney's opinion that since the four identified releases at your company were separate and distinct events which were not the result of day-to-day operations, the insurance company must provide coverage. Your attorney advises you that under Florida law, specifically Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Insurance Corp., 636 So.2d 700 (Fla.1993), he believes that the discharge must be sudden and accidental, not the resulting environmental damage. Accordingly, your attorney believes that the insurance company must pay. You ask your attorney to explain his conclusion.

Your attorney explains that in Dimmitt, the Supreme Court of Florida construed a policy containing a similar pollution exclusion clause to mean that:

(1) basic coverage arises from the occurrence of unintended damages, but (2) such damages as arise from discharge of various pollutants are excluded from the basic coverage, except that (3) damages arising from the discharge of these pollutants will fall within the coverage of the policy where such discharge is sudden and accidental.

Dimmitt, 636 So.2d at 705 (emphasis added); see also St. Paul Fire and Marine Insurance v. Warwick Dyeing, 26 F.3d 1195, 1203 (1st Cir.1994) (pollution exclusion plainly refers to the discharge and not to the environmental damages themselves); Hartford Accident & Indemnity Co. v. United States Fidelity & Guaranty Co., 962 F.2d 1484, 1491 (10th Cir.1992) (the discharge must be sudden and accidental to qualify for coverage, not the pollution damage). Based on the holding in Dimmitt and the unambiguous terms in the policy issued by your insurance company, your attorney concludes that it is clear that the actual discharge, not the resulting damages or contamination, must be sudden and accidental in order to fall within the exception to the pollution exclusion clause.

You instruct your attorney to file suit against your insurance companies for breach of contract. Your attorney smiles and informs you that it would be his pleasure, especially when the laws of some states allow the attorneys to recover attorney fees from insurance companies for failing to provide legally required insurance coverage.

I always advise clients never to throw away old insurance policies. Often the most difficult part of claiming insurance coverage is showing that coverage ever existed. Occasionally, if coverage can be proven, without the policy, the exclusions cannot be determined. Insurance companies do not maintain a copy of old policies, and the burden of proving that coverage existed is on the person or company making the claim for coverage -- not with the insurance company. In the above example, only because the policies were discovered, and the exclusions were written in such a manner that "sudden and accidental" releases were covered could the company recover its remediation costs -- a savings to the company of millions of dollars. Without the policy, coverage could be impossible to prove, and the company would pay for the entire cost of the multimillion dollar remediation.

You are the Plant Manager for Coaters, Inc., an Ohio Corporation. Founded in 1963, your company prepares and coats a variety industrial equipment for its customers. Your operation uses different preparation techniques before coating depending on the particular coating application. Some equipment is sand blasted before coating, others are prepared with a solvent preparation, and still others are chemically prepared with an alkaline cleaning before coating. Your solvent preparation line requires an air permit for the discharge of volatile organic chemicals. Because your facility is in an ozone non-attainment area, your emission limits on the volatile organic chemicals are very strict. Operating at full production, your facility's air pollution control equipment is unable to keep your facility's emissions within the allowable limits issued by Ohio EPA to your company. You have decided to upgrade your facility to allow you to increase production while simultaneously reducing the total amount of volatile organic emissions from your facility. To you, this appears to be a win-win situation -- your company can increase its production by adding a new production facility while keeping EPA happy by decreasing the volatile organic emissions from the plant by upgrading the pollution control equipment.

You begin ordering equipment for your new air pollution control equipment and your new line of production. You determine where to place the equipment in your existing plant, and you have construction drawings prepared. Since you are going to be reducing the amount of volatile organic chemicals released from your facility while simultaneously increasing the production of your plant, you see no reason to bother EPA regarding the new equipment you are installing.

Soon, construction equipment begins arriving. Your old air pollution control equipment is dismantled, and sent off for scrap. Footers for the new production equipment are dug, and concrete is poured. All seems to be going smoothly when a state EPA inspector shows up unexpectedly at your facility. He asks what you are constructing, and you proudly explain the new production line and emissions control system that you are installing. You explain that the new system will allow you to increase production while simultaneously reducing air emissions. You also explain that your production will be shut down until the new system is installed since the old air pollution control system had to be dismantled before the installation of the new system.

The inspector asks to see your "Permit to Install," otherwise known as a PTI, for the new production system. With a confused look, you ask the inspector to explain his concern. You are not building a new plant, nor are you going to increase pollution. You are simply adding production capacity and updating the pollution control equipment required to operate your current production. At this point, the inspector states that he will have someone from enforcement contact you regarding the need for a PTI.

Nervous about your conversation with the inspector, you contact an environmental attorney to ask about the need for a PTI. Your attorney explains that the law in Ohio states:

"[N]o person shall cause, permit, or allow the installation of a new source or air pollutants . . . or cause, permit, or allow the modification of an air contaminant source . . . without first obtaining a permit to install from [Ohio EPA]" Ohio Admin. Code § 3745-31-02(A).

Your attorney explains that since your installation of the new production line will result in the "modification of an air contaminant source," Ohio EPA requires that you obtain a PTI prior to construction. Pursuant to a 1989 Internal Memorandum on PTI applications, for a new facility, Ohio EPA expects a company to obtain a PTI prior to "when the entity begins pouring concrete for the foundations for the structure." For an existing facility that is expanding, the entity must have a PTI from Ohio EPA prior to "when the entity starts pouring concrete for the foundation for the building expansion or for the foundation for any new equipment." To add equipment to an existing facility, an entity must have a PTI prior to "when the entity receives new equipment at the facility." Your attorney explains that your project involves the addition of equipment to an existing facility. Therefore, you would either need the PTI before receiving the equipment on site, or before pouring the footers for the foundation of the equipment, depending on whether Ohio EPA views your project as a physical addition to the plant, or a simple addition of equipment. To be safe, your attorney advises you that a PTI should be in hand before either pouring footers or bringing the equipment on site.

You ask your attorney how long it will take to push through the necessary paperwork for a PTI. Your attorney explains that the agency has 60 days to do a completeness review after Ohio EPA receives the application. Then, if Ohio EPA believes that your source is of such significance that public comments are required, you should allow at least an additional 6 to 8 months. You feel a sudden sickness in your stomach. Your plant is shut down, you have contractors on site with heavy equipment waiting to begin installing what you thought would be a benefit to the environment, and Ohio EPA may refuse to allow you to continue construction because you failed to realize that a PTI was necessary before construction began. You realize that this mistake could put you out of business, or at a minimum cost you a lot of money while your facility is shut down waiting for the necessary paperwork to be approved. To make things worse, your attorney explains that since you are requesting a PTI after construction began, the permit application fee charged by Ohio EPA is automatically doubled.

You explain to your attorney that you could easily be out of business if you cannot continue with construction. Under the circumstances, your attorney believes that you may qualify for a "Temporary Exemption" from the PTI requirements. Your attorney explains that Ohio Revised Code Section 3704.03(W) provides for exemptions from the requirements of a PTI where

"the applicant demonstrates that the source will be installed to comply with all applicable emission limits and will not adversely affect public health or safety or the environment and if [Ohio EPA] determines that such an action will avoid an unreasonable hardship on the owner or operator of the source."

You have to show Ohio EPA two things to receive a temporary exemption. First, you have to show that your new facility will comply with all the pollution control laws, and second, you have to prove that you will be "caught between a rock and a hard place" if you do not receive a temporary exemption. After some research, your attorney advises you that Ohio EPA has issued temporary exemptions from PTI requirements where people would be laid off if construction could not continue, or a company would go out of business if construction could not continue.

Your attorney explains that your situation would warrant a temporary exemption from Ohio EPA's PTI requirements to allow you to go forward with construction. Your new facility, even with its increased production capability will be in compliance with all environmental laws and will be emitting less volatile organic chemicals after the construction is complete. Your attorney places a few phone calls to Ohio EPA, and documents in writing with Ohio EPA your predicament. After assuring Ohio EPA that your new facility will comply with all environmental laws, you receive a temporary exemption from the PTI requirements. However, your attorney explains that you must still apply for a PTI while construction proceeds, and he reminds you that the application fee will be doubled.

You are forever grateful. Construction can proceed while your PTI application is pending. Your attorney then mentions that you should submit you application for a "Permit to Operate," otherwise known as a PTO, at the same time as the PTI application. You smile at your attorney and explain that you already have a PTO. Your attorney smiles nervously and says, "Not for your new system you don't." You suddenly realize, you have even more paperwork to do.

My advice to clients is not to be caught between a rock and hard place. Be aware of the PTI and PTO requirements before you begin construction. Ohio EPA has built into its regulations some leniency so that even if you forget the PTI application, you may get a temporary exemption. However, each state is different, and there is no guarantee that your construction will be allowed to proceed without the proper permits. Once your construction starts, knowingly proceeding without the proper permits puts you at risk that the project may never be allowed to operate, and puts you at risk for knowingly violating an environmental law -- a criminal offense.

You are the owner of a widget assembly plant called Nopaint Inc. Your facility exists in Ohio, but does business with manufacturers all over the United States. Your plant receives premanufactured parts from around the country and assembles the parts into a product ready for market. Your company is registered with Ohio EPA as a small quantity generator of hazardous waste, but requires no air permits or water permits for its production of assembled products.

Recently, a potential client contacts your company and asks you to be a subcontractor for him on a special government project. Your potential client wants you to assemble a special widget for him. However, the first step in the assembly of this particular widget requires that a part of the widget be painted. As a government subcontractor, your potential client explains that you must certify that your facility will be in compliance with all environmental laws. Your potential client explains that he has been looking for an assembler that can certify that its facility will comply with all applicable air pollution control laws and applicable air permit requirements during the painting and assembly. The potential client explains that three other companies have turned away the project in other states because none had an air permit that would have covered this project even though it requires the application of less than five gallons of paint per day. Provided that you can paint one small piece of the widget before it is assembled, you get the contract for assembling it.

The prospects of obtaining this contract are very exciting. Unfortunately, you do not have a coating applicator or an air permit. However, before telling the potential client that you too cannot take the job, you ask him to allow you to call him back after evaluating the capability of your facility. You call a supplier of coating applicator equipment and determine that the mechanical equipment necessary for doing the job is not that expensive, is immediately available, and can be constructed at your facility within a week. If you can get an air permit for the coating applicator, you are in business with this potential client. Your next step is to determine how difficult it will be to comply with Ohio's air pollution control laws and obtain an air permit in Ohio.

You call the Ohio Environmental Protection Agency and ask the person to whom you are transferred how difficult it will be to obtain an air permit. The person at Ohio EPA is very helpful, but not very encouraging. First, you will need a permit to install pursuant to section 3745-31-02 of the Ohio Administrative Code. According to Ohio EPA, you must obtain the permit to install before you can begin construction. The application for a permit to install can take several months for approval. You must also apply for and obtain a permit to operate pursuant to the requirements of section 3745-35-02 of the Ohio Administrative Code. The person from Ohio EPA asks if you would like to have an application for a permit to install and an application for a permit to operate sent to you so that the process can begin. You decline the offer knowing that your potential client cannot wait for months while Ohio EPA processes your requested air permits. You decide instead to call an environmental attorney to see if he has any ideas on how to speed the permit process along.

Your initial conversation with the attorney revolves around how to get an air permit from Ohio EPA on a "fast track" before you lose your potential client. Your attorney informs you of the same thing that the Ohio EPA representative stated. You will need several months to get a permit from the regulators, especially with the amount of work created for Ohio EPA by the new Title V program. Your attorney asks you if you are sure that you need an air permit. You respond that you assumed every painting operation in Ohio needed an air permit.

Surprisingly, your attorney informs you that this is not necessarily the case. Your attorney asks you to send him the Material Safety Data Sheet (MSDS) for the type of paint you will use. You immediately obtain a copy of the MSDS and fax it to your attorney. Using the MSDS, your attorney compares your proposed discharge to the air permit exemptions in the Ohio Revised Code and the Ohio Administrative Code. After checking on the status of the law, and verifying the amount of chemicals that will be released from the amount of paint you will be using every day, your attorney calls you back with good news. Ohio EPA will not require a permit to install for your new source of air pollution since it meets certain criteria found in the Ohio Administrative Code. Section 3745-15-03(kk) of the Ohio Administrative Code states that a permit to install is not needed for . . .

Coating applicators with properly designed and operated particulate control devices and venting systems that employ less than five gallons of only air-dried coating material in any one day provided that the applicators are:

(i) Not located in a nonattainment area for ozone,

(ii) Not subject to limits specified in or specifically exempted from rule 3745-21-09 of the Administrative Code,

(iii) Not subject to federal standards of performance for new stationary sources; and

(iv) Not located at a facility with actual emissions of twenty-five or more tons of volatile organic materials per year and are not subject to a standard under Title III of the Clean Air Act.

Since your facility does not exist in one of Ohio's ozone nonattainment areas, does not fall under any of the other exceptions, and will apply less than five gallons of paint per day, your attorney informs you that you need not obtain a permit to install. This is great news, but you still have the problem of obtaining a permit to operate an air contaminant source.

Your attorney explains that this also will not be a problem. The Legislature in Ohio provided an exemption for certain sources that are simply too small to require that the source obtain an air permit. Section 3704.011 of the Ohio Revised Code states that an "air contaminant source is exempt from this chapter and rules adopted under it if the emissions of particulate matter, nitrogen oxides, organic compounds, sulfur dioxide, carbon monoxide, lead, or any other air contaminant from that source do not exceed ten pounds per day . . . ." While there are exceptions to the exemption, your attorney informs you that your proposed coating applicator definitely will not need an air permit under Ohio's regulatory program. However, your attorney cautions you that because the coating applicator that you wish to install has the "potential to emit," as defined at 3745-15-05(A)(6) of the Ohio Administrative Code, more than ten pounds per day of air pollutants, you must maintain certain records for the exemption to be valid. Pursuant to Ohio Revised Code § 3704.011(C), you must "maintain records that are adequate to demonstrate that actual emissions have not exceeded ten pounds per day." Under Ohio's "De Minimis" air contaminant source exemption rule found in the Ohio Administrative Code at Section 3745-15-05(E), the owner or operator of the source must:

. . . maintain records that show that emissions of any air contaminant from the source did not exceed ten pounds per day on each day the source emitted air contaminants, and that the source in any one year did not emit more than one ton of hazardous air pollutants as defined in division (1) of section 3704.03 Of the Revised Code, and that the emissions from the source, in combination with similar air contaminant sources at the same facility, did not result in potential emissions of any air contaminant from the facility in excess of twenty-five tons during the preceding calendar year. All the following information, if applicable, shall be adequate to make that demonstration:

(1) A narrative description of how the emissions from the source were determined and maintained at or below the daily exemption level, and, for emissions of hazardous air pollutants, at or below the annual exemption level;

(2) A description of the air pollution control equipment used on the source and a statement that the source is not capable of operating without that pollution control equipment functioning;

(3) If air pollution control equipment is used, a copy of any report of the results of any emission test that was conducted following Ohio EPA approved methods, if applicable, or any other emission evaluation;

(4) A description of all production constraints required for the source to comply with the exemption levels;

(5) Records of actual operations that demonstrate that the daily and annual emissions from the source were maintained at or below the exemption level by the use of the necessary production constraints or pollution control equipment;

(6) A list of all similar sources at the same facility and a statement for each such source of the annual potential emissions. Compliance with paragraph (C)(4) of this rule shall be demonstrated; and

(7) A summation of the total emissions from each exempt or similar source, a summation of stated potential emissions from all sources identified in paragraph (E)(6) of this rule, and a certification under oath that the applicable exemption levels were complied with.

You must maintain these records for at least two years, and you must produce the records upon demand, if requested by a representative from Ohio EPA. While these requirements appear somewhat overwhelming, your attorney explains that it is quite simple to be in compliance with the record keeping requirements.

You are amazed that Ohio has made it relatively simple for you to operate a small painting operation. You immediately call the potential client and inform him that you can perform the painting as part of the assembly project. You also inform him that you will be in compliance with Ohio's air pollution control laws and permitting program.

My advice to clients with small operations is to read and to understand the laws and regulations before jumping to any conclusions about the need for a permit. In this example, the owner undertook an investigation of Ohio's air permit laws, and from that investigation was able to obtain new business because he learned that he could legally operate without an air permit. Many states have exempted small operations from the requirements of obtaining air permits under certain conditions. Understanding the regulations helps your business stay out of trouble with the regulators. Like the owner in this example learned, it can also increase your profitability by allowing you to accept projects that you might otherwise refuse.

Here's some motorcycle news from http://www.webbikeworld.com/Motorcycle-news/blog/
The Accident Statistics released for 2006 are sad, but predictable. Motorcycle deaths went UP 5% in 2006, from 4576 to 4810, and injuries increased 1%, from 87,000 to 88,000. This is still a far cry from the 30,500 killed and 2.3 MILLION injured in passenger cars in 2006, but the injury/death numbers for cars are going down while the injury/death numbers for motorcycles continue to climb!

US MOTORCYCLE NEWS - SUMMER 2007

U.S. Motorcycle Accidents Increase for 9th Straight Year; Now Higher Than Pedestrian Deaths

July 23, 2007 - The U.S. National Highway Traffic Safety Administration (NHTSA) released their annual Traffic Safety Assessment for 2006 (.pdf file) today, and motorcycle deaths have unfortunately increased for the ninth straight year. In fact, the 4,810 motorcycle deaths in 2006 now exceed pedestrian deaths at 4,784. Motorcycle fatalities in 2006 increased by 234 (5.1%) over 2005 (4,576). 88,000 motorcyclists were injured in accidents in 2006, an increase of 1,000 from 2005.

Meanwhile, the New York Times reported on an Organization for Economic Cooperation and Development and the International Transport Forum study on July 24 that the U.S. now ranks 42 out of 48 countries in the number of road fatalities per capita (all vehicles, not just motorcycles). Australia, Britain, France, Germany and Japan all have made significant improvements but the U.S. has not.

The U.S. was No. 1 in 1970 in fatalities per distance driven but now ranks 11th, with some countries reporting rates that are 25 percent lower. Here's a graphic comparing the accident rates over time.

U.S. Motorcycle Sales Report for January - June 2007

July 24, 2007 - U.S. Motorcycle sales are mixed over the first 6 months of 2007. Dual Sport sales continue to improve, with a sales gain of +2.8% from 2006 for a total of 21,322 in the first two quarters of 2007.

Meanwhile, sales of off-road motorcycles are continuing to suffer. There were 19,340 fewer sold so far in 2007 over 2006, which is a 15% decrease. So far only 109,893 off-road bikes have been sold this year.

Street bike sales are also off slightly, down 5.0% from the same time period in 2006, with 389,765 units sold, compared to 410,421 sold during the first 6 months of 2006. Scooter sales were relatively steady, down 0.6% (181 units) at 29,719 versus 29,900 for the same time period in 2006.

First Quarter of 2006 U.S. Motorcycle Sales and Statistics

April 26, 2007 - First quarter 2007 motorcycle sales are off from the first quarter of 2006, with street bike sales down 3,259, a drop of 2.6%; off-road bike sales dropped 17.8%; scooter sales down 4.6% while dual-purpose bikes are about stable with a 1% sales decrease.

Total current first quarter 2007 sales for off-road, dual-purpose, street bikes and scooters are 195,092, compared to 209,860 for the first quarter of 2006. This is a drop of 14,768, or 7.0% overall.

Summary of 2006 U.S. Motorcycle Sales and Statistics

March 28, 2007 - The final numbers for 2006 are in and they show a modest increase in overall motorcycle sales, which totaled 1,022,332 (Including scooter, street, dual sport and off-road types). This compares to 1,009,588 in 2005 for an increase of 1.3%.

Here's the breakdown:

The big surprise is the drop in scooter sales, which have been predicted to rise, based on the increased fuel prices in the U.S. The dual sport category is also interesting, with another big increase in 2006. If ATV sales (747,581, a decrease of 4.2% from 2005) are factored in, total sales dropped for the first time in 14 years of consecutive growth (18 brands included).

However, the growth in street bike sales does continue the 14 year trend. Other statistics reported by the Motorcycle Industry Council include an estimate of 8,802,000 motorcycles in use in the U.S. in 2003, the latest year for which figures are available. About 76% of these motorcycles are in the over 749cc category and 16% are 450 to 749cc's.

The largest number of motorcycles are in California, Texas, Florida, Pennsylvania and New York, with 33% of the total motorcycles in use in 2003. You may think that the West Coast has the largest number of motorcycles, with 2,187,100, but the South beats this with 2,645,100 (although this is a somewhat meaningless number due to the arbitrary numbers of states in each region).

In 2004, approximately 5.7 million motorcycles were registered for use on public roads in the U.S.A., which equals about 2.4% of all vehicle registrations. Estimates of market share for 2005, the latest year for which numbers are available, show Honda in the lead with 24% of the market, followed by Harley-Davidson and Buell with 22.6%, Yamaha at 15.9%, Suzuki at 11.8%, Kawasaki at 9.1%, KTM at 1.7%, BMW with 1.2% and "Other" at 13.7%. Why Triumph isn't broken out separately remains a mystery.

In 2005, the motorcycle industry generated an estimated $25.5 billion in consumer sales, services, state taxes and licensing, including $9.8 billion in motorcycle retail sales. Also in 2005, there were 12,013 retail outlets selling motorcycles and related products, with 148,675 employees earning an annual estimated payroll of $4.0 billion.

There's been a dramatic change in the age of motorcycle owners since 1985. For example, owners under 18 years old total only 3.7% of the percent of total ownership in 2003, compared to 14.9% in 1985, while the owners age 40 and over total 53%, compared to 21.3% in 1985.

Motorcycle injuries have been on a steady increase since 1996, from about 55,000 in 1996 to approximately 85,000 in 2005. This comes as MSF trained riders increased from about 125,000 in 1996 to about 325,000 in 2005. Fatalities have also risen dramatically, more than doubling from about 2,100 in 1996 to about 4,550 in 2005.

2006 BMW Motorcycle Sales

January 13, 2007 - BMW reports that worldwide BMW motorcycle sales for December were up 36.8 percent over the same period the previous year, while annual sales topped 100,000 units. BMW Motorrad USA, also posted increases for December as well as annual sales.

The strong performance was claimed to be due to the introduction of new models as well as the continued performance of existing models. At the head of the list was the top-selling model – the R 1200 RT – which was named “Best Touring Bike” in 2006 for the second year in a row by editors of Motorcyclist Magazine.

BMW’s R 1200 GS model – named “Best Adventure Bike” last year by Motorcyclist – accounted for the marque’s second highest volume. The F 650 GS was BMW’s third best-selling bike.

BMW Motorrad USA will introduce several new motorcycles for 2007 – the G 650 series, the F 800 series, and the K 1200 R Sport models – all of which are expected to contribute to another strong year.

100,000 motorcycles were produced and sold for the first time, which now means that over 2 million motorcycles have been sold in the company's entire history. Exactly 100,064 BMW motorcycles were sold worldwide - the highest number ever supplied by the company to customers in a single year. Compared to the previous year (97,474 units) this means a sales increase of 2.7 per cent.

And the company can boast yet another proud statistic for 2006: in December the number of all BMW motorcycles produced since 1923 reached the two million mark. By the end of the year a total of 2,061,977 motorcycles had been produced, 1,616,016 having come off the production lines of the motorcycle plant in Berlin-Spandau since 1969.

In keeping with the company’s roots, the 100,000th motorcycle was a flat twin “Boxer”, an unfaired R 1200 R in Night Black non-metallic fitted with Integral ABS.

The foundation for increased production was laid by investments made in past years. Some 117 million euros was spent on developing motorcycle production in the Berlin plant between 2001 and 2003. Today it is regarded as one of the most state-of-the-art motorcycle plants in the world.

The markets in Western Europe accounted for the lion’s share of the impressive sales results. In Germany, a total of 23,617 units had been supplied as of December, making BMW Motorrad the market leader in its home territory.

The second strongest market for the company was Italy with 13,651 units, followed by the US (12,825 units) and Spain (10,002 units).

The R 1200 GS – along with its sibling model Adventure - achieved phenomenal sales success with 31,138 units. Not only is it the market leader by far among the large-volume enduro motorcycles, it is probably one of the best-selling motorcycle models worldwide in the category over 500 cc.

Ranking in second place in terms of popularity of BMW motorcycles is the touring bike R1200 RT with 13,384 units. The single-cylinder model F 650 GS and the model variation Dakar was sold 12,511 times.

Within a decade, BMW Motorrad has become the biggest and most successful manufacturer of large-volume motorcycles in Europe. But for Dr. Herbert Diess, the managing director of BMW Motorrad, volume increase is not the ultimate objective: “Our company strategy is long-term and oriented towards the permanent profitability of all products; it is not simply geared towards volume. Rankings in registration statistics are not the main focus of our interest. We invest carefully in innovations and technologies for new models, consolidating and extending our segments and market positions. This secures a strong position within the market for us and our dealers.”

Looking ahead to 2007, BMW Motorrad starts out with five new models. The new single-cylinder series with the models G 650 Xchallenge, Xcountry and Xmoto, and the K 1200 R Sport will all be available from dealerships in Germany from March 10, 2007 and the HP2 Megamoto follows in late spring.

2006 Motorcycle Sales

November 2, 2006 - Motorcycle sales in New Zealand are reported to have been on the rise, up about 25% from 2005 to 2006, from 9,000 bikes in 2005 to 11,000 so far in 2006. The cause is thought to be high fuel prices.

October 21, 2006 - It's interesting to note that on/off road motorcycle sales continue to rise, with a 23% year-to-date increase in the first three quarters of 2006 as compared to 2005. This may be due to sales of motorcycles like the BMW R1200GS, Triumph Tiger and others, although the definition of "dual use" is not clear to us.

Meanwhile, street bike sales are running 6.6% ahead of last year, while scooter sales are, surprisingly, down 1.5% for the year.

Can’t you just picture it – maps laid out, clothes folded ready to be loaded into waiting bike luggage, bike all tuned up, the smell of heavy leather gear [or freshly laundered Gore-Tex] floating about the room. The last thing on the motorcyclist’s mind as she/he goes through the Pre-Trip Checklist is The BLS1. Unfortunately, failure to consider The BLS can end up costing the motorcyclist time, money and the safety and peace of mind of his family should something go awry on the trip! The BLS includes: insurance issues, estate planning and traffic/motorcycling laws. We’ll take a look at all three, starting with the always exciting topic of INSURANCE today!

INSURANCE ISSUES for the MOTORCYCLIST

Insurance? You don’t need to worry about no stinkin’ insurance, right? You’re driving a MOTORCYCLE … 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!]

Health Insurance

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 your ID, emergency contact information and list of medical allergies stored visibly on your person – or in your helmet! If you are hurt on the side of 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! “Road ID” is a company that makes an excellent wristband product holding a plate with your emergency information or whatever you tell them to type on the plate! [www.roadid.com].

WARNING: Some health insurers are experimenting with 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, groups, such as the American Motorcyclist Association, are up in arms and preparing to do battle. However, under health insurance policies covering motorcyclists right now a motorcyclist can hit by a DRUNK driver and find out they have NO health insurance coverage! A bill is currently pending in Congress to stop this practice. Support H.R. 1076 in the House and S.B. 616 in the Senate! Follow these bills on the MRF [mrf.org] or AMA [ama-cycle.org] websites.

Disability Insurance

In 2005, there were 179 riders [77 intoxicated riders] killed on Ohio’s roadways – a 35% increase. However, more telling, there were some 3,400 riders injured in a total of 4,500 motorcycle crashes. Statistically, you are MUCH more likely to become disabled, short term or long term, from a crash than you are to be killed. I’m certainly not here to sell you insurance, but if you earn a decent wage, you should protect it. Take advantage of disability policies available through work or, perhaps, a professional group that you belong to. Make sure there is no “hazardous sports” clause, however!

Motorcycle Insurance

Guess what – we are POPULAR folks – at least with insurance companies. More and more major carriers are fine tuning their motorcycle insurance offerings to be competitive. Why? Because they are realizing that, contrary to some folklore, motorcycle owners and operators are not a bunch of scofflaw outlaws – they tend to be dedicated vehicle owners, taking pride in their equipment and enjoying their rides. Also, and more pertinent to insurers, aging baby boomers, present company included, have sparked a motorcycle boom – buying bigger, hotter, faster, cooler and more expensive bikes than ever before. These machines - whether they do 175 out of the crate or cost $35,000 in custom design and components – and their riders all have one thing in common – they need insurance!

Motorcycle Insurance – Medical Payments Coverage

If you are injured in a crash on your motorcycle and can’t pay your medical bills, you may find some financial assistance buried within your motorcycle insurance policy!

Most motor vehicle insurance policies provide, or offer, “medical payments” coverage. This coverage pays YOUR medical bills if you are in a crash with another car. Historically, if you were hit by a car while riding your bike your “medical payments” coverage could be used to pay some of your medical bills even though the coverage is found in your automobile policy.

Check your policy and declarations page to make sure you have “medical payments” [ or “med pay”] coverage. If you were shopping for the lowest PRICE on insurance, some agents will remove some typical coverages in order to cut down the amount of the bill – “med pay” included. You will want this coverage – particularly if you no medical insurance, or a very poor policy.

Motorcycle Insurance – Uninsured/Underinsured Motorist Coverage

One scenario many motorcycle riders face is the cowardly motorist who runs you off the road, throws something at you or otherwise causes a crash in which the motorcyclist loses control or is injured, and then flees the scene. These “phantom motorist” cases are tough, but the law of many states, including Ohio, provides for a recovery under the “uninsured/underinsured motorist” [“UM/UIM”] provisions of your auto insurance policy.

I advise my clients to buy as much “UM/UIM” coverage as they can afford because, like “med pay” coverage, UM/UIM coverage pays YOU when you need it the most! So when does UM/UIM coverage come into play?

The “UM” or “uninsured motorist” part of the equation is pretty obvious. If you are in a crash caused by motorist who simply has no insurance, your “UM” coverage should pay your injury claim just as if it was the motorist’s coverage. The motorist may be driving intentionally without insurance. In some cases, however, the motorist may THINK he has insurance but failed to pay the premium and the policy lapsed. If the motorist improperly, or fraudulently, filled out his application when he applied for insurance, the carrier might yank the coverage once it figures this out – usually following a crash when a claim is made. This formerly insured motorist now becomes “uninsured.” You can use your “UM” coverage to pay your wage loss, medical bills and pain and suffering just as if the other guy did have coverage.

The application of “underinsured motorist” coverage may not be so obvious. Let’s say the motorist who runs you over actually has pretty good coverage - $100,000.00 policy limits. However, because of the severity of your injuries, wage loss, medical bills, pain, permanent injuries and the like, your claim is worth a lot more than that – say, $500,000.00. The motorist, despite his excellent coverage, is considered to be “underinsured motorist” under your policy and your policy’s “UIM” coverage may be used to pay your claim.

Crashes in which UM/UIM coverage becomes involved have generated an incredible amount of litigation. The insurers are constantly pushing to limit the circumstances where such coverages can be used, while lawyers representing injured riders and motorists are constantly pushing to maximize the recovery their clients can obtain. You would be wise to retain counsel in ANY situation in which UM/UIM coverage might come into play.

No Fault States

Kentucky is a “no fault” state – Ohio is not. The difference in the motorcycle insurance world is night and day. In essence, in a “no fault” state, YOUR insurance pays the first part of YOUR medical bills regardless of who was at fault. In Kentucky, it’s the first $10,000.00! The purpose of “no fault” is to reduce the amount of lawsuits – the thought being that if an injured victim is getting his bills paid, he’ll be less likely to sue.

However, while every AUTO policy MUST have “no fault” in Kentucky, policies covering MOTORCYCLES do not! If you purchase insurance in Kentucky and do not have “no fault” on your motorcycle policy, you are essentially carrying a $10,000.00 deductible! This is a complex legal topic and, if you buy insurance in Kentucky, you should discuss it with your agent, or your lawyer, to make sure you understand what you are buying and the limitations of your policy.

Are you carrying an Umbrella?

Do you carry any type of excess or umbrella insurance? These types of policies are designed to go over the top of all other policies and only come into play in extraordinary occurrences in which all other available insurance is used up and you still have losses. An umbrella policy is usually written with large policy limits - $500,000.00 or more. You are required to carry certain minimum policy limits for underlying coverage. I advise ALL of my motorcycling clients to consider an umbrella policy, particularly if you own a home and have significant assets. They are typically very inexpensive and, in that once in a lifetime situation, can save your financial life! Consult your insurance professional for details.

Real Life Insurance Example

So here’s a real-life example of insurance coverage in action. My client, a physician who rides all the time, suffered a dangerous neck fracture when a motorist backed out of a driveway directly in front of him. He needed surgery to fuse his neck at two levels. The motorist, unfortunately, carried Ohio’s pitifully low state minimum auto coverage - $12,500.00. The client’s medical bills were in excess of $80,000.00. His wage loss was in excess of $40,000.00 and growing.

Fortunately, the rider purchased excellent auto coverage which had $300,000.00 “underinsured motorist” policy limits and $10,000.00 in “medical payments” coverage. Even though he also carried excellent medical insurance, the “co-pays” for his surgery and treatment were extensive. He used the $10,000 from his medical payments coverage just to cover these “co-pays.” You can see how a bad wreck can you put in a HUGE financial hole very quickly!

In addition, my client utilized a disability benefit through his office that kept him afloat financially while he was off work completely for more than two months. Finally, he had wisely purchased an umbrella policy with $1.0 million limits. Since his claim has a value that exceeds his $300,000.00 “UM/UIM” limits, the umbrella policy will come into play to pay his claim. While he, like most of us, hoped he would never need it, the “once-in-a-lifetime event” happened to him! Fortunately, he paid attention to The BLS before he took a ride!

So there you go, The BLS about Motorcycles & Insurance in a [rather large] nutshell! Next month, we tackle another exciting topic – Estate Planning for the Motorcyclist!