Will Your Personal Car Insurance Cover Your Part-time Food Delivery Job?

In recent years, especially in the wake of the COVID-19 pandemic, the gig economy has taken off in a big way, and there’s no sign of it slowing anytime soon. As of 2021, 16% of Americans have earned money from the gig economy in some way, and for 31% of those, it’s been their main job. There are a lot of perks to working a gig economy job — making your own hours, flexibility, independence, and (for some) better pay than they might get elsewhere.

But it’s also not without its drawbacks. Benefits such as health insurance, for example, aren’t usually part of a gig job, and some gigs — such as food delivery — may involve extra expenses. People working food delivery jobs are generally on the hook for much of their fuel costs, as well as vehicle maintenance, and, yes, insurance.

Why Do Delivery Drivers Need A Commercial Car Insurance Policy?

Unfortunately, most delivery services, like Uber Eats and DoorDash, will not cover damage done to your vehicle if it’s being used for business purposes. Some ride-sharing services do offer some insurance, but in a lot of cases, it won’t kick in until your personal auto insurance has already covered as much as it could — which kind of defeats the purpose of having it at all.

But that’s not a problem — you can just stick with the auto insurance policy you already have and you’ll be covered, right? Sadly, no. A lot of personal car insurance policies won’t cover delivery drivers without a coverage add-on. If you’re in an accident while working as a delivery driver and don’t have additional insurance, you could find your claim getting denied by the insurance carrier.

On top of that, many companies won’t allow you to drive for them at all if you only have personal auto insurance. Some (like Postmates) will even require proof that your insurance exceeds the state liability minimum before you can go to work for them.

At the very least, you should check with your insurance company if you’re planning to take a job as a delivery driver. You may find you’re not as covered as you think. As for finding a solution to this problem, you could get the aforementioned insurance add-ons for delivery drivers— or you could go with a dedicated commercial car insurance policy, which will likely offer you much better coverage.

What Is Typically Covered In A Commercial Car Insurance Policy?

The good news is, you don’t necessarily need your commercial car insurance to be a second policy; a commercial insurance policy often provides coverage similar or equal to a personal policy. This includes things like liability, collision, medical expenses, and uninsured motorist protection.

However, it’s a good idea to consult your insurance carrier to make sure you’re properly covered while driving in your off hours as well.

How Much Does Commercial Auto Insurance Cost?

Commercial car insurance will cost you more than personal insurance does — per numbers from Ross Martin at The Zebra, your average commercial auto insurance policy will cost about $188 a month — that’s $2,256 yearly, which is considerably higher than the national average.

However, commercial auto insurance also tends to provide more protection than its personal counterpart, and will cover larger vehicles such as food trucks, delivery vans, tractor-trailers, and so on.

Again, if you find these costs prohibitive, or if you only drive delivery on a seasonal basis — such as to make extra money during the holidays — you can always choose to do a policy add-on or business endorsement for your existing car insurance, and drop it again once the season is over.

Can I Just Not Tell the Insurer?

It’s entirely possible that you might be able to neglect telling your insurer about your delivery driver job and be fine. You may never get in an accident requiring an insurance claim while working — but, just as with not having car insurance at all, you’re taking your financial life in your hands. If your insurance company finds out the circumstances of the accident — and it’s almost certain they will — you may not be covered.

If you only use your vehicle a few hours a week for business purposes, you can most likely get away with having an add-on or endorsement. But it’s probably not a great idea to keep this information from your insurance carrier. Instead, consult with them and see what your options are. You can also discuss ways you can save on commercial car insurance, such as bundling your insurance policies together, getting auto-pay or prepay discounts, or a discount for being a student or having extra safety equipment installed on your vehicle.

If you’re driving in the gig economy, commercial auto insurance makes good sense. Talk to your insurer and see what your options are.