Auto insurance for delivery drivers
As the gig economy is becoming the norm and a large percentage of drivers on the road are working for delivery companies, it is important to address the insurance coverage issue for these drivers and its implications. So before you sign up to become an Uber, Instacart or Doordash, GrubHub or Postmates driver, make sure you are covered properly or you could end up in a nightmare financial situation following an accident.
First, you need to make sure you have your own auto insurance policy and not assume any of the companies you deliver for is covering you automatically. You are required by law to cover your vehicle before you drive. Once you obtain your own insurance policy, you need to find out if the company you are delivering for provides any protection for you. Some do and some don’t but even for those that do provide coverage, the coverage is very limited and there is a lot of nuance about when you are logged on or logged off …. etc. So make sure sure to do your homework and read the fine print.
Some companies would provide coverage while you are en route to a delivery after the pickup but not while driving waiting for orders or even en route to pickup an order after it’s been assigned to you! This fact comes as a shock to many delivery drivers.
Many insurance companies handle the delivery gig workers differently as this is a new trend for gig workers. So make sure to have a conversation with your agent and find out how your specific insurance handles an accident while you are out on a delivery. Some insurance companies requires that you get a commercial policy, others simply endorse your personal policy to provide coverage when your delivery company won’t provide coverage (heading to pickup at a restaurant or driving around waiting for an order to be assigned to you for example)
If you deliver for multiple companies, make sure to read the independent contractor agreement insurance section to find out exactly what they cover. Instacart and GrubHub for example require their drivers to obtain their insurance and do not provide any insurance coverage for their delivery drivers.
Doordash offers a $1 million bodily injury coverage and property damage for its drivers while the delivery driver is on “active delivery” as stated in their agreement (from the restaurant to the client only). Uber Eats on the other hands provides the coverage from the moment the delivery is assigned until the delivery is complete making their coverage of of the best delivery companies offers. However, note that this coverage is excluded in New York! Uber Eats also offers comprehensive and collision coverage for its drivers if they already carry this coverage on their personal policy but Uber Eats deductible is $1000 which could be higher than your personal deductible.
So as you can see, different companies manage this coverage differently and even in the best cases like Uber Eats, this coverage could still be lacking. It is important to make sure you cover the gap and the biggest gap for most delivery drivers is the time you are logged in waiting for an order or when you are heading to pickup the order.
So how to you cover this gap? there are few options:
- Obtain a commercial auto policy: this is the most expensive option as business insurance rates higher but in some cases, you might not have an option if your personal insurance company does not cover delivery drivers under a personal policy
- Add business use to your personal auto policy: some companies would allow to keep a personal policy and rate your vehicle for business use which will end up costing more but definitely not as much as obtaining a business auto policy
- Rideshare endorsement coverage: most insurance companies are catching up with the gig economy trends and are letting drivers keep a personal policy and adding the Rideshare endorsement to provide the coverage while excluded by the delivery company.
So make sure to have a conversation with your agent and find the best option for you depending on your insurance Co. Not disclosing your gig job is not a good option as you could end up with your policy being canceled or worse coverage declined after you file a claim.