Insurance Needs for Businesses offering Ridesharing and Delivery Services

Between Postmates and DoorDash, GrubHub and Instacart, the gig economy is alive and well in 2020. And with the stay-at-home orders and sheltering in place recommendations that have come with the COVID-19 pandemic, consumer demand has shifted even further toward these delivery services. But when it comes to insurance coverage for such services, it gets complicated. The employees are contract workers, driving their personal vehicles — so how can the company protect themselves and their employees? At Rose & Kiernan, Inc. this topic has come up with our clients. Take a look at these recommendations to dispel some of the confusion surrounding insurance for gig-economy-reliant businesses. Remember that the way your business offers delivery — either in-house or through a third-party app like Uber Eats — can be an important distinction for insurance policies.

When utilizing in-house delivery, businesses should make efforts to reduce the inherent risks. Employees must have valid licenses, which should be verified and documented by the company. A safe driving record, and a vehicle in safe operating condition, is vital. Most importantly, employees should be sure — and be able to prove — that their individual insurance policy includes for-hire delivery.

When utilizing third-party apps for delivery services, the contract workers’ insurance is almost always the primary insurance. However, most personal automobile insurance policies do not cover for-hire delivery. With those situations, which are not uncommon, the business is most at risk.

But with the increased reliance on the gig economy during the COVID-19 pandemic, additional measures are being taken to adapt. On the state level, Insurance Journal reported that at least one state’s insurance commission mandated that insurers cover delivery services for restaurants on personal auto insurance policies and offer a Hired Auto and Non-owned Auto Liability (HNO) rider on a restaurant’s commercial general liability (CGL) insurance policy if requested. This mandate is in place until the public health emergency is lifted. While these measures are temporary, they could suggest a larger shift in the insurance industry, making more permanent changes to accommodate the new ways people do business today.

Like we mentioned last month, it is important to make sure that your business’s insurance policy provides coverage for the actions of the driver or that you add an HNOA endorsement to provide coverage for non-owned vehicles used in your business. But, even with HNO coverage, the policies still might not provide coverage in the instance of delivery or the use of third-party apps. Make sure you are positive about what your policy covers, and what it doesn’t, before offering delivery or using delivery apps at your business.

That said, with insurance policies for companies involved in the gig economy, the devil is in the details. Authors from Cranfill Sumner & Hartzog LLP put together a list of considerations for restaurants adapting to COVID-19. This is recommended reading as it prompts business owners to think about what their decisions will mean for insurance coverage, most notably new job responsibilities for employees and how this could affect coverage and rates.

At Rose & Kiernan, we’ll work with you to find a personalized plan that fits your needs. To do that, it’s important to realize how granular the policy can be. The plan can depend on whether businesses use in-house delivery or a third-party app, the kind of insurance the employees have, and even if the drivers are reimbursed for mileage. Understanding your coverage as a business, and your employees’ rights as contract workers, is vital in the gig economy.

Delivery is part of our daily lives, especially at such a time as now, during the global health crisis. But it can also expose companies to financial risk if they don’t find an insurance plan that covers all liabilities. Having a conversation with your agent or broker is the first step to making sure that, no matter what happens, you’re covered.

Any questions? Please contact us here or by calling (800) 242-4433.

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