The case follows a $1.7 million damages order against David Blick, who injured his friend Michael Anthony Franklin while the pair were riding together on the Capital Circle off-ramp to Canberra Avenue during evening peak hour in 2009.

According to court documents Mr Blick hit a large wooden tree stake that was lying in the bike lane and veered into his friend, causing him to fall off his bike and into the path of an oncoming car. In a judgement published on Friday, Justice John Burns found Mr Blick had acted negligently and not exercised reasonable care to observe the piece of wood before the collision.

Noor Blumer, a Director of Blumers Personal Injury Lawyers whose firm is representing the girl and her family, said while rare, there had been several other cases of cyclists injuring other people, and those who were uninsured risked damages that could be financially devastating.

"Cyclists have been known to cause motor vehicle accidents, but this is not common. Most accidents when motorists injure cyclists occur because motorists fail to see them," Ms Blumer said.

While not able to discuss the specifics of the young girl's case, Ms Blumer said cyclists not covered by insurance risked being sued personally if found at fault for damage.

"The cyclist in this $1.7 million case appears to have had insurance coverage. If he didn't, then he would have to pay the money himself – this would bankrupt most people."

Last week's damages order has been a hot topic among the city's cycling community, with many concerned about the possible precedent set by the finding.

"This judgement handed down is preposterous. The duty of care and responsibility of a cyclist in the position described in this instance rests just as much with the following cyclist as it does with the lead cyclist," cyclist Daniel Green told The Canberra Times' cycling blog The Lycra Diaries.

"By drafting very close behind or beside another cyclist, you are putting yourself at greater risk as you can be directly impeded or contacted by that other cyclist. If you are not comfortable and confident with this situation, then do not place yourself in that position."

Other riders said the ACT Government also needed to shoulder some of the blame for the accident, arguing that cycling lanes directly next to cars were a far greater risk to safety than dedicated and physically separated bike paths.

An Insurance Council of Australia spokeswoman said many home owners already had property and personal liability cover as part of their home and contents insurance policies that may protect them from similar legal action. Those who were not covered could protect themselves by joining organisations like cycling clubs that included insurance as part of the annual membership fee, although it was important to read policies carefully to see what was included or excluded.

While there had been discussion of making such insurance mandatory for all bicycles in the past, Ms Blumer said enforcing it would be extremely difficult, given many cyclists were either children or people who chose to ride because they could not afford a car, and were therefore unlikely to be able to afford insurance.