What type of auto insurance coverage is needed for food delivery apps?

Food delivery companies have experienced a surge in business as a result of the pandemic with the industry expected to grow by 12% per year through 2023. This booming trend has opened the doors for independent drivers with general qualifications limited to age, valid driver’s license, a couple of years of driving experience, and auto insurance. While the first three requirements are clear cut, that “auto insurance” condition is not only vague but could be misleading.

The type of insurance needed by delivery drivers is dependent on what their personal auto policy covers. Depending on how often you drive your car for deliveries, your personal auto insurance won’t be enough. Personal coverage just covers social use and basic commuting and will not extend coverage for business use.

Drivers who deliver for takeout apps like GrubHub or DoorDash, for example, are considered “public/livery conveyance” workers and not covered by a standard personal auto policy when on the job. Some insurance carriers do allow food delivery if the insured is employed by a specific restaurant, but beware – personal policies typically exclude claims involving paid delivery of goods. So, if you’re involved in an at-fault collision while on the job delivering food, you’re looking at a denied claim and responsibility for a repair bill.

So what’s a food delivery driver to do?

Delivery drivers should look into commercial auto insurance coverage to protect themselves when on the road. The addition of an “endorsement” to a personal auto policy is another consideration. An “endorsement” is a revision or supplement to an existing policy. In effect, it modifies the original terms of a policy and is used primarily to add coverage for a situation that wasn’t previously covered.

There also exists a specific Transportation Network Company (TNC) endorsement, which some insurance companies have added as an option due to the increasing number of food delivery and ridesharing (Uber, Lyft, etc.) drivers.

Food delivery coverage is important to have and to understand. BayCoast Insurance is here to help you navigate your options. Contact Us »