With more and more Americans relying on delivery of everything from remote working documents to late-night snacks, delivery drivers are growing in numbers and scope every day. If you plan to join this trend — or if you’re a business looking to offer delivery services — you should understand how it affects your insurance coverage.

Both the gig economy and employer responsibilities can be murky areas. The insurance issues involved are no exception. To help you figure out the right coverage no matter your situation, consider these three key factors and how they relate to your circumstances. 

1. Personal vs. Business Use

If you own the vehicle and begin to earn a side income making deliveries, doesn’t your personal auto insurance cover your needs? The answer, in most cases, is no. Why? Simply put, personal auto insurance covers personal auto use — not business auto use.

Of course, you could simply opt not to inform your insurance carrier about the change, but this dangerous choice could backfire. If you get into an accident or experience a theft while making a food delivery, the police report will note what you were doing at the time. And with all likelihood, your vehicle insurance carrier will swiftly deny the claim based on that fact alone. 

To cover business usage, you will need to obtain a business insurance policy. Business policies for drivers — often known as livery insurance — come in several forms depending on what other coverage you may need. You may also be offered some policy recommendations through your delivery platform. 

2. Employer and Owner Coverage

There are generally two parties to consider when covering your delivery activities. Obviously, the owner of the vehicle (and usually the person driving) needs insurance coverage against financial loss or injuries due to an accident, theft, vandalism, or other driving hazards. But the company that hired them as a delivery driver may also need to be covered. Why?

If your employees do deliveries for your business, the business may be held liable for any accident the driver causes — even if they are using their own car — while on the clock for you. If you contract with a delivery person, you may bear liability even for non-employees. This is a special risk if the driver is classified as an employee under federal or state labor laws. 

Some delivery drivers purchase what is known as hired and non-owned coverage to protect both parties in this transaction. Alternatively, both the business and the driver may opt to purchase separate policies to cover their own liability issues.  

3. Types of Delivery Use

Finally, your insurance needs and pricing may be affected by what type of deliveries you do. A driver who delivers passengers to their destinations is often treated differently than one who delivers packages.

Consider the reasons why these two similar jobs are actually different from the insurance carrier’s view. The former, for instance, may need to cover a higher dollar amount of medical expense and liability coverage when transporting people.

The package deliverer, though, has two unique issues. First, they often make multiple stops and so may have more opportunities for conflict and more mileage. Second, they generally leave their vehicle unattended in a way that ride-share services don’t.  

Where You Should Start

Whether you’ve already gotten into the delivery game or you’re just considering it, begin by consulting with a reputable insurance agent. At Metropolitan Insurance Service Consultants, Inc, we understand the complex issues facing the delivery industry. Call today to make an appointment and learn about all the options, responsibilities, and best practices.