What Drivers Should Know About Food Delivery and Auto Insurance
The ongoing situation with COVID-19 has brought about severe consequences from both a health perspective and a financial perspective. Unemployment is soaring, and as a result, many are now seeking new forms of employment. One industry that has seen some significant growth since the onset of the Coronavirus crisis is the delivery business. Companies like DoorDash, SkipTheDishes, and InstaCart have seen increased demand as people are confined to their homes and unable to attend the shops and restaurants they would normally visit. In the United States, InstaCart hired 300,000 new workers in a single month to keep up with the soaring demand.
Positions with these companies are considered part of the “gig economy”. Workers are hired as contractors and they use their own vehicles to deliver the products to customers. This leads to an important question: “How would working for one of these companies affect my auto insurance?”
For the majority of drivers in Ontario, it is likely that your current insurance is insufficient to work for one of these companies. The standard automobile policy in Ontario is meant for personal use of the vehicle. As soon as you start using your vehicle to deliver food and are paid for those deliveries, you are using your vehicle for commercial purposes.
When an insurer issues a policy, they set the premiums based on the risk of insuring the driver. Because of the nature of their work, commercial drivers are considered higher risk and a conventional auto policy won’t provide sufficient coverage.
The consequences of working for one of these companies without adequate insurance can be significant. If you are involved in a collision while working, even if the collision is not your fault, your insurer may refuse to provide coverage should they find out you were working for a delivery company at the time of the collision. Even more significant, the insurer may cancel your policy completely on the basis that you failed to inform them of your work and therefore engaged in what is known as “material misrepresentation”. Cancelled insurance policies are similar to at-fault collisions. When you go to purchase a new policy with a different insurance company, your premiums will be higher if you have had a previous policy cancelled by your insurer.
There is significant risk to working for one of these delivery companies without informing your insurer. If you are considering joining a company like DoorDash or SkipTheDishes, be sure to inform your insurance company and ask what coverage options are available. Some insurers are starting to provide special endorsements to personal car insurance policies which will cover you in the event of a collision while working. Other insurance companies may require you to purchase a commercial vehicle policy. While commercial policies and extra endorsements will likely increase your insurance premiums, the consequences of failing to secure adequate coverage can be financially devastating and it is simply not worth the risk. It is always better to err on the side of caution and discuss this potential new employment with your insurer before you take to the roads.
About the Authors
Nick understands that those who have suffered through the trauma of a serious personal injury are already in a position of vulnerability, and is committed to helping them through this difficult process, offering the support and advice they need. Specifically, he seeks to help right the balance in an insurance system that is becoming increasingly antagonistic toward injured individuals.