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What Type of Insurance Covers On-Demand Delivery Drivers?


For those considering a job delivering food or other consumer goods in a personal vehicle as a contracted employee, commercial auto insurance is highly recommended.

Personal policies are not sufficient because of the livery exclusion − the transporting of people and/or goods for hire, such as by a taxi service, motor carrier, or a delivery service, is excluded under the personal auto policy.

CHECK OUT: 7 Essential Types of Insurance for Small Business Owners

The reason livery exclusions exist is because courier delivery services introduce greater risk for insurance companies. The more deliveries you make, the more you are driving your car, which increases your risk for an accident or ticket.

According to a U.S. Bureau of Labor Statistics study, pizza delivery (and other driver-sales jobs) ranked fifth on the list of the top 10 most dangerous occupations. 

A recent Netquote survey found more than 46 percent of respondents living in a suburban area and 56 percent of respondents in an urban area use ride-share services often. At the same time, more than a quarter of urban participants said they rarely used a shared ride, while almost 36 percent of suburban respondents admitted the same.

The popularity of ride-sharing has enticed people to enter the business as drivers. It wasn’t much of a stretch when many of these ride-sharing companies also got in the on-demand delivery business.

According to TheRideshareGuy, insurance companies find product deliveries to be a greater risk than delivering people for a few main reasons:

  1. More frequent stops and starts than rideshare – ride-hailing services drivers pick up and drop off, whereas consumer goods delivery drivers carry multiple packages in their vehicles for multiple location drop offs. 
  2. More time away from the car – Unlike ride-hailing services drivers, couriers temporarily vacate their vehicle often when delivering a package, leaving undelivered packages in the vehicle at risk for theft. The financial value of the cargo is often high, particularly with package delivery services, such as Amazon Flex.

Insurance options for courier companies

Hired & non-owned auto coverage – most commonly a form of insurance provided for pizza delivery drivers – provides companies with additional protection against being named in a lawsuit should an employee’s insurance not be sufficient.

Depending on the terms of the agreement, either the employer or the driver pays. Confused? Don’t be. Let NetQuote find you the best commercial auto insurance at the best rate.

In keeping with what insurance industry experts recommend that courier services companies provide in terms of auto liability and notes, some companies offer commercial auto insurance that covers up to $1 million in bodily injury and/or property damage.

Another option, cargo insurance, covers damages or loss of freight caused during shipping. Based on maritime law which makes it somewhat complex, overall, cargo insurance provides peace of mind to courier companies that each shipment’s value is covered in any dispute. 

RELATED: Do You Need to Always File a Police Report After an Accident

For those considering a gig working as a courier delivery services driver, the good news is that insurance companies are actively creating solutions to accommodate the growing on-demand economy. After learning what potential employers provide, it is best to consult your insurance company on what solutions are provided in your current state. 

On-demand delivery is in demand

This need for insurance for on-demand delivery drivers isn’t likely to decrease as Americans live more and more in a convenience culture. The on-demand delivery market has exploded in the last few years. Consumer indulgences ranging from food and apparel to health and beauty are delivered at your doorstep, within hours − even minutes.

According to the US Census Bureau’s American Community Survey, on-demand food/grocery delivery alone attracts 5.5 million monthly consumers who yield $4.6 billion in annual spending.

For those who don’t like to speak to people, on-demand delivery jobs are a fruitful way to earn additional income while remaining flexible with their time. Similar to the concept of ride-hailing services, on-demand delivery services conveniently and expeditiously connect people with businesses that sell all types of consumer goods such as groceries, diapers, flowers, gourmet food and much more. 

On-demand delivery services can be a win-win for everyone involved: Busy consumers can procure items they want, when they want it, without having to leave the house or office. Businesses can offer unlimited delivery options to increase sales at no additional cost of overhead; Couriers benefit from a flexible job that requires minimal training and provides competitive hourly pay.

Just make sure you have the right insurance coverage before you hit the road.

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