This is a high level overview of an emerging exposure for business owners and employees for certain classes of business – food or product delivery. As normal commerce is shut down or restricted due to state or federal orders, many business owners are getting creative in order to serve customers and keep their staff employed by offering delivery service. With this comes changes in risk exposure, which may impact insurance coverage. If you are a business and delivery is new to your service model, or you are an employee who is now making deliveries via your personal auto, please contact your PayneWest representative for further consultation and guidance. If there is a business related auto accident, the insurance carrier will need to review the facts of your loss to determine if any coverage will apply. PayneWest will also be able to assist you with submission of your claim and facilitate carrier communication if necessary.
This bulletin is split into two parts – Commercial (Business) and Personal.
Perhaps you are a restaurant, winery, brewery or other type of business who has added delivery service in order to stay open. Your employees are probably driving their own personal autos for this service, so the first question that likely comes to mind is, “Are we covered?” While this section will focus on coverage for damage to others’ property and bodily injury claims (liability) , we will also explain first party coverages (to the employee’s vehicle – collision, comprehensive, other than collision) later in this article. Here are a few key considerations:
- Does your company have a business auto policy? This may seem like a basic question, but some businesses do not own any vehicles and thus don’t currently have a business auto policy. If you are in this situation, your first step is to purchase this coverage.
- Does your business auto policy have the correct coverage for this risk? Once you have a business auto policy in place, it is all about “symbols.” This is an industry term – each symbol indicates what type of vehicle is covered under your policy. In order to protect your business for this exposure, you would need symbol 1 – ‘’any auto” or symbol 9 – “non-owned autos.”
- Other considerations—your employee drivers and your business auto policy. If you take care of the first two items above, your business is likely covered for this exposure. The vehicle your employee is driving for delivery must meet the policy definition of an “auto,” which is typically a land motor vehicle designed for travel on public roads. But what about your employee drivers – are they covered under your business auto policy? In order for your employee to be protected under your business policy, you need an endorsement to cover their individual liability exposure. A typical title for such endorsement is “Employees as Insureds Endorsement.” Without this endorsement, your employees are not considered insureds under your business auto policy.
Let us now focus on the employee drivers and their personal auto insurance. Again we will focus in this section on third party (liability) exposures and address first party (collision, comprehensive/other than collision) exposures toward the end of this article. In order to best protect themselves, individual employees should consider the following, assuming they have a personal auto policy.
- Will a Personal Auto policy protect you in the event of an accident while making business deliveries? It depends, and the landscape is changing daily. Most personal auto policies contain an exclusion for business use and/or delivery service, and the language can vary across insurance carriers. In our COVID-19 world, some insurance companies and state departments of insurance have come out and stated that such exclusions will not apply for a set period of time. It is best to consult with your PayneWest representative to discuss your coverage.
- In the event of a loss, which policy responds? For third party liability claims, the personal auto policy will generally respond first (primary) and the business auto policy will be excess. In a situation where the personal auto policy’s liability limits are inadequate, the business auto policy will then be triggered and respond, subject to the policy limits.
First Party Damages to the Employee’s Vehicle (Collision, Comprehensive, Other than Collision)
For damages to the employee’s auto, the same rules apply. The employee would need to carry physical damage (collision, comprehensive/other than collision) coverage in order for the personal auto policy to respond. In the event of no physical damage coverage on the personal auto policy, the business auto policy would need the appropriate symbols (typically symbol 9—non-owned autos) and first party physical damage coverage must be purchased.
Communication Is Key
Employers and employees need to communicate on this topic before venturing into the world of product delivery. Sharing of insurance documents is crucial, as is speaking to your PayneWest representative.