Business use of your vehicle

It is a common belief that you only need a business vehicle policy, if your business owns the vehicle. However, there are many situations where a standard auto insurance policy might not provide the protection you expect. The growth of gig work, including food delivery and ridesharing, have pushed this concern to the forefront.

Strictly speaking, a standard personal auto insurance policy excludes coverage for some of the usage just mentioned. If you are using your vehicle to transport goods to a customer or to transport people for a fare, a standard auto insurance policy does not cover these risks, potentially leaving you without coverage if you have an accident.

Some major rideshare platforms have introduced their own coverage which takes effect when you are transporting a rideshare customer, but this can still leave you with some gaps in coverage.

For example, your personal auto policy protects you when you are using your vehicle for personal purposes, such as running errands or going on a road trip. This assumes that you are not signed into a rideshare app as ready and available. Your rideshare insurance covers your risks when you have a rideshare passenger in the vehicle. However, while you are logged in as available for a rideshare but are not transporting a passenger,  neither policy covers your vehicle. Your personal auto insurance policy sees the situation as business use, excluding any claims made during that time period from coverage and the rideshare insurance has not yet been triggered because you do not have a rideshare passenger in the car yet.

Food delivery workers face similar coverage concerns, for example, pizza delivery drivers. As discussed, most personal insurance policies do not cover transport of products (or food) or people for a fee. In the US, fewer than 20% of pizza restaurants offer insurance to their drivers. The balance, over 80%, may not be covered if they have an accident while delivering to a customer. Before taking on work for a food delivery service, reach out to your broker to learn about your coverage options. You may qualify for a business-use policy designed to cover the occasional business use of your vehicle. However, if you work full time as a delivery driver, you may need a dedicated commercial vehicle insurance policy.

The use of your personal vehicle for business can be a tricky topic and the solution may not be the same for all drivers, even when situations seem similar. The gig work boom for delivering food, delivering goods, or transporting people continues to grow, providing part-time and full-time opportunities to earn money on your own schedule. But it is also important to be sure that your insurance is structured properly for the risk.

Just reach out to your broker to get information on the various coverage options available if you will be using your personal vehicle for business use.