If you’re like most people these days, you’re constantly looking for ways to make life easier. Many new smartphone apps have made it much simpler to run errands or enjoy everyday life. These services—such as Uber, Lyft, Shipt, and Doordash—are convenient and quite easy-to-use. Furthermore, the number of local restaurants offering delivery services is increasing.
But what if you’re thinking about becoming a driver for one of these companies? While having a side gig position can be a great way to earn extra money for everyday expenses or to pay off debts, there might be a bigger problem you don’t’ even realize—specifically, whether your auto insurance covers you while you’re working.
Our Stauffer-Klug Insurance team has put together this handy guide about car insurance for food delivery and rideshare services to help educate you further.
Personal Auto Insurance Doesn’t Cover Business Use
First of all, it’s vital to understand that generally, there is no coverage when you’re using your personal vehicle for business use. This includes food delivery and rideshare services. If you get into an accident while on the clock, there’s a good chance you’ll have to pay for damage or injuries out of your own bank account.
How is this possible? There are certain rules and exclusions in your policy that specifically address using a personal vehicle for commercial use. Working in one of these types of businesses nullifies your policy contract, making it important to ensure you are covered in other ways.
Your Employer Might Offer Some Additional Coverage
Paying for damages out-of-pocket might sound scary, but it’s important to realize that you likely have a small amount of supplemental coverage through your employer. Many restaurants that offer delivery service have a specific type of business insurance called hired and non-owned insurance. This helps cover delivery drivers for liability coverage should they get into an accident while driving for their job. In addition, the big national ridesharing apps offer drivers a bit of supplemental insurance to help if there’s an accident. However, this additional coverage usually doesn’t help repair damage to your vehicle after a crash, so it is important to have some level of protection yourself.
There Might Be Gaps in Coverage You Need to Know About
Furthermore, you’ll also want to look out for additional gaps in coverage. While the tiny bit your employer offers you can help in certain situations, it is usually limited only to when you’re actually delivering a meal or have a passenger in the backseat. Time periods when you are waiting for your next assignment or fare are usually excluded, which can create a problem since your personal policy won’t cover those times either. That’s why it is incredibly important to talk to your agent about your options before there’s a problem.
How Carpooling Affects Your Auto Insurance
But what about carpooling? Is it considered business use? The short answer is no. If you know the people who are riding in your car—such as a coworker or friend—then there generally isn’t a problem. However, if you exchange payment for services or it starts to happen regularly, it might be a good idea to talk with your agent to find out how your policy is affected.
Talk to Your Local Agent to Find Out More
What it all really comes down to is that you need to talk to your insurance agent about your coverage options before taking your first shift as a delivery driver. It’s incredibly important to always have continuous coverage, and you want to make sure you aren’t left without a valid policy.
Of course, we are here to answer any questions you might have about business use and your personal insurance policy. Please contact us today to schedule an appointment.