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Courier MBA Day 19: Make Sure You Are Covered.

Car Keys On Insurance Documents

Yesterday we got into detail about what it costs to run your car.

Are you aware that a significant portion of one of those car related expenses might be wasted money?

We spend hundreds on our car insurance, yet most delivery drivers are providing a ready made excuse for insurance companies not to pay out when the time is needed.

Are you aware you may not be covered while on a delivery? Most personal insurance policies have language in them that specifically state that excludes coverage when using the vehicle for commercial purposes, or when using it for “livery.”

Livery is a technical term for “transporting goods or passengers for hire.”

You don't even have to have food in the car. All you have to do is be logged in available and the insurance company will classify you as being engaged in commercial use or livery.

What does this mean if you're in an accident?

Auto accident involving two cars on a city street

If another person is at fault, they're responsible for the damages. Their insurance company would have to pay out, if they are insured.

If you have to rely on your insurance company and they find out you were on delivery, they will deny the claim. That means you're on your own.

The delivery companies may have some coverage. Uber Eats is the best at this, they actually do provide their own vehicle insurance. To my knowledge, they are the only ones who actually do provide that insurance.

Doordash and Postmates have some liability coverage. It is not an auto insurance policy. All their insurance does is, it MAY cover damage you cause to someone else's property after you've gone through your insurance company. Understand that the language they use may give them the ability to not cover anything if you didn't have the proper insurance in the first place. These companies do not provide coverage for your vehicle at all.

Grubhub provides no coverage that I am aware of.

But these companies ask us for our insurance information. If they are okay with it, doesn't that mean it should be enough?

They wiggle out of this by saying you are the one responsible for making sure you have the right insurance. They don't go into any further detail about WHAT the right insurance is.

I think they do it this way for two reasons:

One, they're not allowed to control how you run your business. It's all part of them trying to maintain the ability to use contractors. Their take is, you're running a business, it's your responsibility to know what you should do.

I think the real reason they don't say anything more is, they wouldn't get enough people to deliver if they did. They need drivers. They need to make it easy for people to sign up. If it's too difficult, they won't get enough people to do this. Insurance isn't easy. So they figure it's better to just be silent.

If your insurance excludes delivery work, this leads to some difficult choices.

Take the chance. Hope nothing happens.

Update your insurance so you are covered. Your insurance may have options to add coverage. If not you may have to change providers

Quit delivering. If you're not willing to take the risk and the cost of updating your insurance is too high, it might be better not to deliver.

If this is something you do a few hours a week, that's a tough decision. It's great that you're making some extra money. But is it worth the risk? And is it worth changing your insurance over?

For me, with this being my primary income, it made sense to switch to a policy that would cover me. It cost a little extra but that increase was small compared to my overall earnings.

There are many who decide they're okay with the risk. They'll do it on the hope that the insurance company won't find out they're on a delivery if something happens. I don't recommend this approach at all. You'd be amazed at what an insurance company can figure out. The more they have to pay out, the more they're going to dig for a reason not to pay. Personally, I don't want to pay a claim out of my own pocket, so I'm not willing to take that chance.

Three steps to making sure you are covered.

The first thing you want to do is check your insurance.

Most personal policies deny coverage for delivery work. There are some exceptions.

Checking your policy can be a bit of a pain. There's so much legalese that it's not always easy to understand. In most policies, there's a section towards the back that says “Exclusions.” That's the part of the policy that says “if you're doing this, we don't have to pay.”

Often you can log into your insurance company and find your policy documents there. Sometimes they'll email it to you. You might have a printed copy.

If you have access to your policy, find the exclusions section and read through it. Look for references in there to delivery or commercial use or ‘livery.' If you find them, chances are you aren't covered.

If you can't find it, call your agent or call their help line. State that you're thinking of picking up delivery work and need to find out if your policy will cover you.

If you are covered, you're good to go. Personally, I'm on State Farm and they do not exclude delivery work. I don't know if they do in some areas, maybe in some states they do.

Find out if your insurance will add coverage.

Is there something they can add to your policy? They might call it a rider or an endorsement or an addendum. Some policies have an option that you can add that might only be a few dollars a month.

If they don't have any options, you will need to either change insurance or quit delivering.

The ‘I'll just risk it' isn't an option as far as I'm concerned.

Not unless you have the money sitting around to pay for someone's totaled Beemer. I'm thinking if you did, you wouldn't be doing this.

I wrote about my journey when I changed insurance. That might help you.

When I started, I was on Liberty Mutual. They didn't have coverage and there were no options to add it. At the time, I got a commercial policy from Geico which didn't cost a lot more than I was paying already.

The problem with getting a commercial policy is it took it out of our bundle that we had for my wife's car and our home. It still wasn't horrible until Geico bumped up the premiums too high. Personally we were able to get on with State Farm for a personal policy that would cover me while driving.

Here's the challenge I found with looking for insurance: Everyone's willing to give you a quote. Too often, they don't let you know up front that they don't cover you. It's a pain trying to sift through all the insurance companies.

Because of that, I'm going to throw out a couple of options where you can find someone to do a lot of the work for you.

  1. Check out CommercialInsurance.Net. You can click the link or call 405-875-0047. You can talk to someone there, let them know you do delivery work, and they can find options in your state that will quote policies that fit your situation. They are not insurance agents but they can get you in touch with one. I may receive a referral fee if you use them.
  2. Find an independent insurance agent who represents a lot of companies. If you let them know what you are looking for, specify you need coverage for delivery, they can usually get you quotes from several places.
  3. I switched to State Farm earlier this year. They provide coverage in enough places that doesn't exclude gig work that it's one company you may want to get a quote directly from. I don't receive anything from them for referring them.

Then it's up to you to weigh whether a switch makes sense.

As many hours as I deliver, it makes sense for me to get whatever policy will cover me. The extra amount is small compared to what I earn.

If you're doing this for about a hundred bucks a week and now you have to pay $100 extra for the right insurance, it may be time to think about other options. That or do your deliveries on a bike.

Ultimately, insurance is another of those business decisions. Do you take the chance of letting all your business earnings be wiped out and then some?

If you have a personal policy that provides coverage for you or provides an add on that you can use, please let me know. I want to be able to let people know what other options are available.

Could this help someone else? Please share it.