Does your auto insurance cover your delivery driving?


Delivery drivers will need to make sure their personal auto insurance has this feature to avoid coverage gaps if an accident happens. (iStock)

Delivery services are a growing way to make extra money in your free time by delivering meals, groceries, merchandise and passengers. And its popularity has surged since the start of the pandemic.

But before making your next delivery with your own car, it’s vital to have affordable auto insurance coverage that covers delivery gigs. Your personal auto insurance policy may not cover every incident when making a delivery. 

While most delivery driver jobs provide drivers with some insurance coverage, it may also be necessary to purchase special rideshare coverage or a commercial car insurance policy.

Delivery drivers looking to explore their auto insurance options can visit Credible to see what’s available to them.

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The car insurance gap

Most app-based Transportation Network Companies provide drivers with complimentary coverage for bodily injury and property damage if an incident happens while on a delivery gig. 

However, these apps also require drivers to carry a personal car insurance policy for their delivery vehicles. The state-required minimum liability coverage and current car registration are necessary and you may also choose comprehensive car insurance if you have a newer vehicle or a loan payment.

Where you are in the delivery process when an accident happens determines which party you file an insurance claim with. Having inadequate car insurance can result in an auto claim coverage gap resulting in substantial out-of-pocket expenses.  

For example, you may be able to file a claim when actively delivering an order from the restaurant to the customer but not while you’re driving to the pickup site. 

Drivers may also have to pay a cash deductible before the delivery service begins paying for damages to your car.

Your car insurance company likely covers incidents when you’re using your car just for personal use. Incidents that occur when using your personal vehicle for app-based delivery services or an employer may not qualify. 

There are two situations when drivers may not have to purchase additional coverage:

  • Using a personal vehicle for employer deliveries on a temporary basis
  • Delivering with an employer-owned vehicle

But if you work part-time for a dedicated delivery app, a standard auto insurance policy won’t provide full coverage when using your car for business purposes.

If you’re in the market for new car insurance, you can visit Credible to compare different auto insurance companies and shop their plans.

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What delivery drivers should know

Delivery drivers will need to add a rideshare gap coverage to their personal auto insurance to avoid coverage gaps and to have more extensive coverage when the employer’s car insurance service doesn’t cover the full claim amount.

Adding this policy increases the monthly premium but the increase can be as small as $5 per month. The declarations page lists the coverage limits for the various steps of the delivery process.

This additional coverage isn’t necessary when using an employer-owned vehicle. However, most delivery gigs require using a personal vehicle.

Depending on the car insurance provider, the driver may need to purchase commercial auto insurance. This coverage only covers using your car for business purposes, not personal use. 

It’s also important for drivers to review the delivery service auto coverage policy to know what’s covered. Knowing potential gaps can also make it easier to compare car insurance rates.

The delivery partner may only cover incidents during these phases:

  1. Phase 1: Waiting to accept a pickup when logged into the app
  2. Phase 2: Driving to the pickup location after accepting an assignment
  3. Phase 3: Driving with the order or passenger in your vehicle

The delivery service is less likely to cover incidents occurring during the first phase. Also, the app won’t cover incidents when drivers are not logged into the app or actively working.

Personal rideshare insurance extends auto coverage to all delivery phases to prevent gaps.

What small business owners should know

Business owners that have employees make deliveries in personal vehicles can be financially responsible for an auto insurance claim. Standard commercial auto insurance for business vehicles may not cover these expenses.

Many insurance companies offer a non-owner insurance policy to cover incidents involving personal vehicles. If you’re a business owner and this sounds interesting to you, you can explore pricing and find the right auto insurance plan that fits your needs on Credible.

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Final thoughts

It can be easy for delivery drivers to believe that the delivery service provides full auto coverage for injuries and damages when driving for business purposes. Unfortunately, coverage gaps can be more common than many realize.

Reviewing the business and personal car insurance service policies can prevent incurring a lapse of coverage unexpectedly. 

It doesn’t take long to compare auto insurance offers and with Credible’s partners, you can eliminate the time-consuming part of your search. Check out Credible to explore your options and find the right plan for you.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

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