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Navigating Auto Insurance For Delivery Drivers

Deliveries have become a lucrative side hustle, but if you’re using your own vehicle, make sure to get the right car insurance for delivery drivers.

The U.S. Census estimates that 1.6 million people were delivery drivers in the U.S. in 2021 and those jobs are expected to increase by 11% by 2031. That’s compared to 5% growth across all occupations.

The Coverage Gap Between Personal and Employer Auto Insurance

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 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.

Do You Need a Commercial Auto Insurance Policy to Deliver Food?

You may need a commercial auto insurance 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 and 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.

Examples of Employers and 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 auto insurance policy.

Here’s 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 need to be 21 or older, have a valid U.S. driver’s license, drive a mid-sized or larger car and have an iPhone or Android smartphone.  You will need to maintain your own car insurance policy. Amazon’s policy includes $1 million 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.

New York drivers may need to buy commercial auto insurance.

Domino’s Pizza stores are often locally owned franchises and owners can purchase commercial car insurance coverage types such as non-owner car liability insurance that can cover drivers’ cars during work times. 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 during the “delivery service” period. That period begins when you accept the delivery request until the order is marked as delivered, unassigned or canceled.

You must also have primary car insurance with at least the state minimum coverage. DoorDash’s coverage is an “excess” policy, which means the company’s kicks in after you exhaust your auto insurance coverage following an accident.

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 an “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 upon 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.

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 starters, 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 coverages to add.

One commercial coverage type you can add as a business owner is non-owner 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-owner 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-owner car insurance. They should look into a commercial auto policy.

Article courtesy of Forbes: