When was the last time you ordered from your local pizza place or called a rideshare service for a trip to the airport? We all use these convenience services from time to time to help make life a little easier, and they’re often great.
For some people, opportunities such as Lyft, Uber, Doordash, and Instacart are more than just a helpful hand. They are a great way to earn extra money to supplement income, pay bills, or save up for a special indulgence. The only problem? Using your personal vehicle for business use has a huge effect on your auto insurance coverage.
So, how do you know you have appropriate coverage? Here is what you should know about car insurance for food delivery, grocery delivery, and rideshare services.
You Aren’t Covered Under Your Personal Auto Insurance Policy
First of all, it is important to understand that delivery and rideshare drivers using a personal vehicle likely don’t have coverage under their personal auto policy. The reason for this is that there’s a special clause in the policy contract that excludes commercial use. When you’re working as a driver, you’re using your vehicle for business and not just a personal ride.
This means that without additional coverage, you’re leaving yourself open to the possibility of having to pay for things like your car, the other driver’s vehicle, and any associated medical bills if you’re ever involved in an accident. Scary, right?
Your Employer Might Offer Some Supplemental Coverage
The good news is that your employer probably offers some supplemental coverage. Most local restaurants that offer delivery have what is called a hired and non-owned insurance policy. Essentially, it provides you with liability insurance—i.e. coverage for other people’s property in the event of an at-fault accident—while you’re driving your own car on the job. Also, most national ridesharing and food delivery apps offer a supplemental policy to contract employees. The downside is that these types of policies do not typically cover the cost to repair damage to your vehicle and you would likely have to pay for those costs out-of-pocket.
Potential Gaps in Coverage to Look For
That said, there is another aspect you need to be aware of. It’s important to realize that supplemental and hired and non-owned policies usually have limitations, including when they’re actually in force. Most require that you be active in the middle of a delivery or carrying a passenger for you to be covered. If you’re in between assignments or waiting on a passenger pick up, you might not have any coverage at all.
How About Carpooling?
Many of our policyholders want to know if carpooling is considered commercial use. The short answer is no; it isn’t. In most cases, driving a friend or acquaintance to a different location doesn’t involve any exchange of money. However, if you start to charge, or you’re doing this regularly, it is a good idea to speak with your agent.
Why You Need to Speak with Your Agent
As you can tell, the topic of delivery driving and personal auto insurance can get a little confusing. That’s why it is always best to talk to your local agent to determine your exact needs and coverage options. By doing so, you can rest assured that you have everything covered in case of an accident.
At Long & Company, we want to help you make sure you have the right type of insurance before starting as a delivery driver. Please contact us today to schedule an appointment.