Do delivery drivers have the proper insurance coverage?

By HUB SmartCoverage Team on March 31st, 2020

With governments imposing extreme measures across the country in the fight against COVID-19, the demand for delivery drivers has surged.

Restaurants can only serve the public with delivery and takeaway, and a portion of Walmart Canada’s planned hiring of 10,000 workers is to meet the delivery demand. Pizza giant Dominos, where delivery makes up 55 per cent of its orders, announced a similar move.

But do these drivers have proper business insurance coverage?

“Anytime you’re using your vehicle for a business purpose, anytime you’re turning your car from a private passenger vehicle into a commercial, money-making enterprise … that user needs to be noted by your insurance company so they are aware of your changing risk,” Pete Karageorgos, director of consumer and industry relations at Insurance Bureau of Canada, told Canadian Underwriter recently. And, he added, it doesn’t matter if the delivery is parcels or food.

The Insurance Bureau of Canada is clear: If customers are planning to become delivery drivers for whatever reason — to make money on the side or find new work because they’ve been laid off — they have to let their insurer know.

“The word needs to get out. We continually try to reinforce that message and it may be something that, as an industry, we really need to highlight again for people,” Karageorgos said. “Given that insurance companies are still operating, albeit remotely in many cases, they and brokers as well still have the ability to service customers and make changes.”

What does this mean? If you’re going to become a delivery driver, you’ll likely see a rate increase.

“If you are a person who is now using your vehicle, which you have in past driven to and from work – and you’re on the road more because of this – yeah, that would translate to a higher risk. And a higher risk typically translates into a higher rate in premium.,” he said.

One million people applied for Employment Insurance following new federal government measures announced last week, compared to the usual 27,000. With people pressed financially, what are the chances clients are honest?

That’s always a concern no matter what the economic situation may be, Karageorgos said.

“Insurance is based on the principle of utmost good faith and that requires the client, the insured, to notify their insurer of any changes to their driving habits (and) to their risk factors,” he said. “It’s up to insurance professionals to educate people and advise them of why it’s necessary to call in the change — and to outline the possible repercussions if that doesn’t happen and there’s a claim.”

Karageorgos said he’s less concerned about a situation in which the business owner could decide to handle deliveries amid rising orders. They likely have proper policies. “It’s those people who may not be taking the time to do their homework,” he said. “How do we reach those people? That’s the key challenge: Reaching those people [to let their] brokers know.”

It’s interesting to note, however, that not only insurers in Canada are thinking about this in the face of COVID-19 pandemic. In the U.S., Gov. Tony Evers ordered that insurers operating in Wisconsin assist restaurants offering delivery service to customers during the pandemic.

According to the March 23 news release, insurers must cover delivery services for restaurants on personal auto insurance policies and offer coverage for hired drivers and non-owned automobiles as a rider on a restaurant’s general liability insurance if it is requested — both at no extra cost to the policyholders.

“I’m grateful that so many Wisconsin restaurants and their workers are serving our communities through delivery, takeout, and drive-throughs. With the insurance industry stepping up to provide coverage for deliveries, restaurants and workers will have the protection they need to operate in this temporary economy,” Evers said.

Meanwhile, NPA Insurance Managing Director Paul Coleman told Insurance Bureau Magazine U.K. pharmacies have been finding it difficult to get their cars covered due to the pandemic. With commercial cars having been considered a high-risk category, car owners have been struggling to purchase coverage due to the prevalence of “shunts and bumps.”

“We implore the motor insurance industry to support pharmacies in this endeavour by offering cover(age) for their delivery cars at reasonable prices, to help provide a life-saving role during the COVID-19 epidemic,” Coleman said.