With much of the country practicing social distancing and self-quarantines due to the coronavirus pandemic, many companies are looking for delivery drivers to get groceries, takeout meals and other items to customers.
If you’re looking to pick up some extra cash as a delivery driver and using your own car, be aware of possible auto insurance consequences.
Do You Need a Commercial Auto Insurance Policy to Deliver Food?
You may need a commercial auto policy if you’re a delivery driver. That’s because food delivery is business use of the vehicle, not personal use.
Car insurance companies see business use as a higher risk than personal use, and charge higher rates accordingly. Delivery drivers are more likely to get into accidents and file car insurance claims. Commercial auto insurance policies aren’t only for food delivery, but also any type of work could fall under business use, like delivering packages or driving customers.
If you start driving as a job (whether full-time or as a side hustle) and don’t tell your auto insurance company, you could face a claim denial in the future if you cause an accident.
Some auto insurance companies have responded to the COVID-19 pandemic by extending coverage to customers who are using their personal vehicles to make deliveries.
If you start working as a delivery driver and use your own car, speak with your car insurance agent and ask if you insurer has made any changes for delivery drivers during the COVID-19 outbreak.
Have State Departments of Insurance Taken Any Action?
Some states’ departments of insurance have offered guidance to auto insurance companies for delivery drivers. Many of these changes are temporary, but important to know about if you’re using a personal car for delivery work.
You can check with your state’s department of insurance to determine if the insurance commissioner has ordered any special provisions for delivery drivers. It’s a good idea to check back often as this is a developing situation.
What Companies Provide Car Insurance for Delivery Drivers?
Depending on who you’re driving for, your employer might provide auto insurance. If you’re a driver, make sure you understand where the employer’s coverage ends and begins, and whether there’s a coverage gap between the employer policy and your personal policy.
Here is a look at some employers’ car insurance policies.
- Amazon Flex provides drivers with an Amazon Commercial Auto Insurance Policy in all states except New York. To drive for Amazon Flex, you will need to maintain your own car insurance policy. Amazon’s policy includes liability car insurance, uninsured/underinsured motorist coverage and collision and comprehensive coverage (contingent upon you having collision and comprehensive coverage on your own car insurance policy). Amazon’s coverage only applies when you’re driving during a delivery block and does not cover any passengers.
- Domino’s Pizza plans to hire about 10,000 employees, including delivery drivers, in response to demands due to the coronavirus outbreak. Many Domino’s Pizza stores are locally owned franchises and owners can purchase commercial car insurance coverage types such as non-owned car liability insurance. However, the franchise owner’s coverage may not be sufficient and your personal auto insurance may not cover you for car accidents while you’re working.
- DoorDash has a commercial auto insurance policy that covers drivers for up to $1 million in bodily injury and property damage if you cause an accident while on an “active delivery.” This means you need to be in possession of the takeout order.
But here’s the catch: DoorDash’s coverage is an “excess” policy, which means if you cause an accident while on a delivery, DoorDash’s insurance only kicks in after your personal auto insurance coverage is exhausted. If you don’t have your own car insurance, DoorDash won’t cover you.
- GrubHub requires you to have car insurance and does not provide its drivers with any commercial auto insurance.
- Instacart’s independent contractor agreement states that you are responsible for getting your own car insurance coverage in amounts “consistent with legal requirements, including any required no fault automobile liability or commercial liability insurance.”
- Postmates offers and “excess” auto insurance policy of up to $1 million dollars in liability coverage per accident for property damage and injuries you cause to others. You are required to carry your own car insurance. Postmates’ coverage only kicks in after your own policy limits are exhausted.
- Uber Eats offers a commercial auto insurance policy for all drivers, except in New York. Uber’s coverage has up to $1 million in liability coverage from the moment you accept a delivery assignment until you complete the delivery.
Uber also has collision and comprehensive coverage (contingent on you having these coverage types on your own policy) to cover car repairs if your car is damaged while on a delivery assignment, though you’ll have a $1,000 deductible.
Uber’s coverage can also cover you between deliveries, if your own insurance doesn’t. This is for the time period when you are available and awaiting your next assignment. If your auto insurance policy doesn’t cover you during this time, Uber’s commercial policy has up to $50,000 for bodily injury for one person per accident, $100,000 for bodily injury to multiple people in one accident, and $25,000 for property damage in one accident.
- Walmart plans to hire 150,000 temporary employees to help with customer demands due to the coronavirus. If you work as an associate delivery driver, you will need “access to a mid-sized sedan or larger vehicle.”
Walmart’s website does not indicate if it provides any commercial car insurance while you’re making deliveries, so it’s a good idea to speak wit your insurance agent to make sure you’re covered.
Is There a Coverage Gap Between My Personal Auto Insurance and Insurance Through My Employer?
This is where things can get tricky. Depending on your car insurance company and your employer’s insurance, there may be a gap between both insurance policies. For example, you might have coverage through your employer while driving a takeout order to a customer, but not while driving to the restaurant to pick up the order.
If you’re in a car accident during a gap in coverage, your personal car insurance company could deny coverage, meaning you could be stuck with property damage and medical bills.
The best strategy: Call your car insurance company or agent before using your car for work. If you don’t have the right car insurance for your delivery work, you could get stuck paying big auto accident bills yourself.
What If I Own a Small Business and I Rely on Delivery Drivers?
If you own a small business, like a restaurant or store, and you rely on employees to deliver goods in their personal vehicles, both you and your employees may need certain types of commercial insurance.
For starter, your drivers generally need a commercial auto insurance policy if they are using personal vehicles to deliver goods or services. As a business owner, you could be held liable if one of your drivers causes an accident and doesn’t have the right type of insurance. Speak with your business insurance agent about a business owner policy (BOP) and what types of coverage to add.
One commercial coverage type you can add as a business owner is non-owned car insurance. This would cover injuries and property damage if an employee causes an accident while driving their personal vehicle on behalf of your business. But non-owned car insurance is for drivers who occasionally use their personal cars for work.
If your drivers are using their own cars for delivery on a regular basis, they likely wouldn’t be covered under non-owned insurance. They should look into a commercial auto policy.
Article By: Jason Metz