Using Your Car for Deliveries? Here's How It Affects Your Insurance
What to know about car insurance and delivery work
If you’re thinking about using your car for deliveries, either as a way to make a little extra money or as a full-time job, there are a few things you need to know first about your auto insurance that will help protect you.
There are two main types of car insurance: personal and commercial. Sometimes it can be difficult to know what is covered by each type of insurance—and what types of car use you need to make your insurance company aware of.
As a rule of thumb, if you are being paid for an activity while you drive your car, then the car is no longer being operated for personal use and you need to inform your insurance company about it.
Does Car Insurance Cover Delivery?
When you buy car insurance for your personal car, that type of insurance is a personal auto insurance policy. When you have this type of policy, you are insured for personal use of the vehicle, including errands and commuting to work. Your personal car insurance policy does not cover you for use of the car when it involves business or compensation, such as delivery. For paid delivery, you will need commercial car insurance.
Should You Tell Your Car Insurer?
You need to tell your insurer if you will use your car for any business use. Even if someone else, like your child, is driving your car for their part-time delivery job, not telling your insurance company about the real use of the car in that way can lead to denial of a claim or render your insurance null and void.
What Are Some Questions Insurers Will Ask?
Insurers may ask a few questions to clarify how your vehicle is being used exactly. These could include:
- How often will the car be used for business or delivery?
- How many miles per week or month will it be used for delivery?
- Who will be driving the car?
- What company are you driving for?
- What will be delivered? For example, will it be food, packages, medicine, other goods?
- Are you being compensated for the delivery work?
Your insurer may also ask about the value of the goods being delivered.
Ride-Share Driving vs. Delivery Driving
Although both delivery and ride-share driving involve compensation, the coverage for ride-share drivers is different from coverage for delivery drivers.
Ride-share driving is not covered automatically on a personal car insurance policy, and only some companies allow it. An insurance company can add an endorsement to the personal policy to allow it. The permission only applies to ride-share work and does not cover any other type of business activity.
Delivery, as mentioned, is not covered on personal insurance, and requires a commercial car insurance policy, in most circumstances.
Using a Car to Deliver During COVID-19
Although standard car insurance policies exclude coverage for paid delivery, some insurers that issued discounts for car insurance earlier in 2020 also issued extended coverage to include delivery on a temporary basis during the COVID-19 pandemic.
Not all insurance companies allow you to use your car for delivery, so it is best to contact yours or to check its website to find out how this exception applies to you.
Below are a few examples of what car insurers have done throughout the coronavirus pandemic. It is important to note that many of these efforts or exceptions were terminated in June, or are being handled on a case-by-case basis.
- Allstate: The company extended delivery coverage to all policies in all states, but the coverage was only in effect as long as there was a COVID-19 emergency order in the state.
- Farmers: Coverage was provided in some states for food, grocery, pharmacy, and medical supply delivery. However, the length of this extension varies by state. For example, in Connecticut, the coverage is currently listed as extended until Sept. 10, 2020, but in Kansas, the coverage was extended only until June 1, and in Nevada until July 1. Other states have no extension of coverage.
- Progressive: It said it would cover people who were temporarily making food or medicine deliveries due to the pandemic, but indicated no timeline for the coverage’s end.
Other insurers, such as Liberty Mutual (coverage was allowed, but only until July 1) and Travelers, also issued similar extensions of coverage or made other temporary coverage adjustments. The type of coverage and length of the exception varies by insurer and depends on the state you live in.
Does Employer Insurance Cover You?
Employers can add coverage to their commercial policies to cover the activity of employees when driving their own cars to do deliveries for the business. This type of coverage is called non-owned car insurance, but it is meant to protect the business owner, not you.
Non-owned car insurance does not provide coverage for the delivery driver’s car. If you have an accident in your car while delivering, do not expect your employer to cover your repairs.
It is your own car insurance that needs to cover your collision or comprehensive coverage. In most cases, you need to get commercial insurance to be properly insured as the owner of the car when you are using it for delivery.
Do Delivery Firms Provide Coverage?
Each company has its own approach to insurance coverage, and the terms and conditions can differ depending on the states that govern the industry. So it’s important to ask questions of the company you will be doing work for—as well as your own insurance company—to make sure you fully understand how you and your car are covered.
If the company you’re working for tells you it will insure you while driving, ask for a copy of the policy and show it to your own insurance company or agent. This will help you get some professional guidance on whether the coverage is enough, and will also give your insurer a chance to explain how your personal insurance will, or will not, cover you.
Some companies cover you with limited coverage during the time you work for them but also require you to maintain personal car insurance. For example, Amazon states that you must maintain personal auto insurance coverage on your car. Uber also provides some coverage for Uber Eats drivers but requires you to maintain personal car insurance coverage, too. Even though these companies provide coverage, you still have to tell your own car insurance company about your delivery work to be sure your personal insurance stays valid.
Other companies only offer excess-liability coverage. This is not full insurance coverage—it is similar to the concept of personal umbrella liability. The coverage requires you to have your own base insurance before it kicks in, and only pays after your own policy coverage limits have been reached.
How Much Does Delivery Coverage Cost?
The price of delivery car insurance will depend on all the same factors that shape the cost of personal car insurance, such as the type of car you drive, your age, driving experience, and sometimes even your credit score. It will also include factors like what you are delivering and how often your deliveries occur.
The most important thing to remember when using your car for deliveries is that not declaring the use of your car in this way to your insurance company can invalidate your insurance.
- Personal car insurance does not cover delivery driving.
- Due to COVID-19, some insurers have made temporary exceptions.
- Your employer’s insurance will not cover damage to your car while delivering.
- The price of delivery insurance varies by your actual use.
- Call your insurance agent before using your car for deliveries.