Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 13, 2022

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Key takeaways...

  • Fast food delivery drivers using their private vehicles need to have a commercial car insurance cover in addition to their personal policy. The driver is responsible for his insurance coverage although some restaurant provides them
  • Fast food restaurants with their means of transport have their vehicles insured with either a commercial insurance policy or business auto policy
  • The standard insurance company may deny you an insurance claim in the case of an accident where the driver was carrying items for compensation purposes

As fast-food deliveries increase, most restaurants have also raised the number of delivery drivers. The insurance companies have also increased fast food delivery insurance premiums.

Therefore, most drivers who happen to be teenagers and college kids end up taking the wrong insurance policies for their work.

They have in turn faced various challenges while filing the claim with insurance providers who end up denying them payments.

Additionally, the delivery drivers risk losing their vehicles as well as getting their driving license and car registration suspended.

If you are a food delivery driver in need of better auto insurance coverage, start comparison shopping by entering your ZIP code above!

Why Don’t Personal Auto Policies Cover Delivery Driving?

The insurance companies understand the risks involved in delivery jobs, which lead them to increase the premium rates. Whether you’re driving for Pizza Hut, Door Dash, or Uber Eats, your insurance company looks at it the same way. Once you clock in or your app is turned on, your personal auto insurance policies turn off. If you do not have a commercial auto policy or a policy from your employer, you are driving uninsured.

Insurance companies have to look at risk. Just being on the road more frequently puts you at a higher risk of an accident or other claim. For pizza delivery drivers and other delivery drivers, there are other factors in play:

  • Most of the delivery drivers are teenagers and college students who have a high probability of causing an accident due to inexperience. Rates may already be higher than they would be for adults in their mid 20’s or later.
  • Even if they’re extremely skilled drivers, delivery drivers have exposure to high risks such as theft, injuries, and accidents.
  • The delivery workers have pressure from hungry customers and tight deadlines to meet, which increases their chances of speeding.
  • They make deliveries in places that they do not know so well, meaning the chances of attacks are so high.
  • They are always on the move which increases the likelihood of an accident.

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Various Delivery Means

In the fast food delivery, the restaurants may have a company-owned delivery system where they use vans, motorbikes, or scooters.

On the other hand, the restaurants may not have an available means of transport, which calls for the drivers to use their vehicles (some teenagers use their parents’ cars).

Most of the personal vehicles have the standard motor insurance policies that do not cover the usage of vehicles for commercial purposes. Therefore, the drivers would require getting the commercial auto insurance coverage at their expense.

Where Can Delivery Drivers Get Commercial Coverage?

In the case of an accident, if you were using a personal vehicle to run the commercial errands, then the insurance companies would deny you claim.

Therefore, it is important to acquire a commercial insurance policy, which is more expensive than the personal insurance coverage.

In the past, most drivers bought a completely separate commercial policy. In today’s insurance markets, some companies offer an add-on coverage option specifically for delivery drivers. It’s still more expensive than a normal personal policy, but it’s cheaper than a second commercial auto policy.

Unfortunately, the high cost of a commercial auto policy can drive people who might otherwise drive away. Some delivery companies will offer employees coverage under business policy limits. Even a small accident, especially if you’re at fault, could cost you a lot more if you don’t have the proper policy.

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What Is Non-Owned Auto Insurance?

Non-owned auto insurance is an insurance policy covering the vehicles owned by drivers. This may come into play for delivery companies that own vans or other vehicles and pay delivery drivers to make deliveries in them.

However, some of them may be reluctant to add the new employees who are not aware of the coverage. If a worker gets into an auto accident during work while under this policy, then the insurance company provides protection for the business, injuries, and the damages caused. Workers compensation would also come into play along with higher liability insurance limits. Unfortunately, businesses face more risk in accidents that might otherwise look exactly the same from an outside perspective.

The insurance policy covers the business only when the person’s auto policy denies the claim or cannot afford enough limits to cover the claim or the damages.

Every restaurant employer should consider purchasing this insurance coverage to protect the business in case of an accident.

Multi-unit fast food restaurants may take into account getting the business auto policy.

The drivers operating under these restaurants undergo a semi-annual screening process to ensure they meet the eligibility criteria of the insurer. The insurance company carries out the selection process on behalf of the restaurant.

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Should Employers Have A Commercial Policy for Delivery Drivers?

While hiring new drivers, most of the employers expect the workers to have an insurance policy and more than one year of experience. However, they do not get clarification of what insurance cover is required for them to operate. If you’re hiring independent contractors as many food delivery apps do, pushing the insurance burden off onto drivers may work. If you’re hiring employees, it may be a bigger legal hurdle that could cause serious problems if anybody gets into an accident, especially if there are medical bills or bodily injury on either side.

In the case of an accident and the insurance company gets to learn that the driver was involved in an accident that required compensations, then the company does not honor the claim.

In such a situation, the employer is also risking his business since the injured party will most of the times go for the restaurant employer for compensations.

Alternatively, the delivery driver may be liable for his actions, and he has to compensate the third party liability.

Why do most fast food restaurants deny insurance coverage?

Restaurants refuse insurance coverage for their delivery drivers since they do not want involvement in any lawsuits when the personal insurance providers fail to cover the damages.

The employers have the immunity since there is no law stating that a restaurant requires providing the non-owned auto coverage for their workers. Therefore, the drivers should ensure that they have the proper insurance policies.

Providing Insurance to the Personal Owned Vehicles

  • Fair Prices – Providing only insurance and other related costs are cheaper compared to having to take care of the vehicles services and also the fact that more driving results to increased wear and tear.
  • Responsibility – Delivery drivers take good care of a car they own than the company one. Minimal accidents are equal to lower premium rates for the restaurants.
  • Low maintenance cost – The company is not liable for the maintenance costs related to the use of vehicles since that remains to the personal insurance policy and the car owner.

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Ask the Right Questions

Before taking a job in a fast food joint as a delivery driver, it is important to ask the employer about the car insurance policy that they have to avoid denial of claims.

You may consider insuring an older car rather than a new one since the personal insurance policy has a keen eye for the vehicle’s mileage. Other factors to consider include your age, driving history, and personal demographic.

Start comparison shopping today to make sure you are adequately covered while delivering food! Enter your ZIP code below to begin comparing auto insurance rates!