clock March 4, 2021 comments No Comments flowchart Automobile InsuranceBusiness InsuranceOur Blog tag
a gig worker delivering groceries while wondering if his personal auto insurance policy will protect him

It’s not surprising that many people are picking up side hustles during the pandemic to make ends meet. There’s a huge surge in deliveries, and services such as Uber and Lyft continue to gain a foothold in the marketplace.

However, many drivers don’t realize that their personal auto insurance usually won’t protect them. If you’re driving for an employer you may have some coverage, but don’t assume this is the case. If you don’t have the right coverage, it could ruin you financially should you ever have a car accident.

Gap Between Coverages

If your employer provides insurance coverage, it probably only covers you while you are conducting business on their behalf. For instance, some locally-owned franchises buy non-owner car liability insurance that can cover your car while you’re making a delivery. However, it probably won’t protect you while you’re on the way to the restaurant.

You might assume that your personal auto coverage would cover you since your employer’s policy doesn’t. However, a personal auto insurance policy excludes coverage for business activities. This could leave you holding the bag for any costs incurred from an accident including property damage, medical bills, and legal fees should the accident trigger a lawsuit.

Do You Need Commercial Auto Insurance

That depends. If you are delivering food or other items to customers independently for a service such as DoorDash or UberEats they may offer insurance coverage, but you need to understand where their coverage ends otherwise you are at risk.

Both these companies cover their drivers through a commercial auto insurance policy with up to $1 million in bodily injury and property damage if you cause an accident while you are in possession of the takeout order. However, these are excess policies that only kick in after your personal auto insurance policy has been exhausted. The problem is your insurer must know you are driving for business, otherwise they could deny your claim, cancel your policy, or refuse to renew.

UberEats also offers collision and comprehensive coverage to protect your vehicle while you on a delivery assignment, providing you have these on your personal policy. However, this coverage comes with a $1,000 deductible and minimum liability limits (50/100/25) which don’t offer enough protection if you’re in an accident.

Many other delivery services state that you are responsible for proper insurance coverage, including no fault automobile liability or commercial liability insurance. Some policies protect you while you’re delivering, but not during the return trip.

Rideshare Companies

Uber and Lyft must provide insurance coverage for drivers while they are using their rideshare app. However, coverage varies depending on the company you work for and where you are in the fare process. For instance, both companies offer minimum liability coverage while you’re waiting for a fare and more once you accept a fare request for pick up.

Drivers must be very careful about the contingencies placed on liability coverages. If you have an accident you will need personal comprehensive coverage and you will need to pay their deductible of either $1K with Uber or $2.5K with Lyft.

Business Owners

If you’re using drivers to deliver your goods and services, you could be held liable if they cause an accident and don’t have proper insurance. Your insurance agent will provide you with advice on what types of coverages you should add to your business owner’s policy.

If you are only using drivers occasionally and they drive their own vehicle, your agent may recommend non-owner car insurance. However, regular deliveries will require a commercial auto policy.

Don’t guess when it comes to your insurance coverage. Talk to an independent insurance agency like ours. We understand insurance and can help you close insurance gaps in the most affordable and efficient manner possible.

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