If you are a delivery driver using your own vehicle -- beware -- your personal policy will not likely cover your accident on the job. Aside from being stuck with paying accident repairs out of your own pocket, you could also lose your drivers license and vehicle registrations.
I’d like to walk you through a real-life example and leave you with exactly what you need to know to be safe (and covered) on the roadways if you are a delivery driver.
If you are a vehicle passenger or hit by a delivery driver, continue reading as well, there are some important things you need to know.
A Delivery Driver Questions Insurance Coverage
A caller recently asked me if I could help him prevent the state from revoking his car registrations. His son had been in an accident using a vehicle titled in his name. The son was covered on the car insurance policy, but the insurance company denied coverage because at the time of the accident, he was delivering something for compensation; he was a Papa John’s pizza delivery driver, and had just pulled out of the Papa John's parking lot when he was struck by another car, who had the right of way.
The owner of the other car submitted his claim for property damage to his insurer, State Farm, who paid the claim. On payment of that claim, State Farm then became entitled to recover the amount it paid, roughly $8,000, from this delivery driver and any insurance that applied.
The delivery driver submitted the accident claim to the insurance company that insured the car titled in his father’s name. After doing some investigation, the insurance company denied coverage based on an exclusion in the policy for accidents occurring while delivering something for compensation. It turns out the exclusion is very common in most, if not all, personal auto policies.
Important note: this means that if you are a delivery driver, you may have an exclusion in your personal auto policy that means you are NOT covered if you are in an accident on the job — vehicle damage to your car, injury to another person, property damage — nothing will be covered by your car insurance company and you will have to pay out of pocket.
Additionally, one of the consequences of getting a denial of coverage from your insurance company for an at-fault accident is that the State of Wisconsin will revoke the license of the driver and the registrations of the vehicle owner.
Watch For Misleading Language In Employer Contracts
I was surprised to learn of the hiring practices and insurance language used for delivery drivers. When I discussed the insurance coverage gap with the son, he indicated that when he was hired, Papa John’s asked him about proof of insurance, which he had and provided to them. I went to the Papa John's web site and saw that the requirements for a driver stated:
“Must have a reliable vehicle and own insurance and be able to pass a motor vehicle/back ground check.”
This is misleading, in my opinion, because an individual’s ‘own insurance’ will not typically cover them when they are driving for a fast food restaurant, unless they have purchased a commercial policy. Papa John’s should know that, but I doubt the average insurance purchaser would. Not only that, a commercial policy is very expensive and would quickly consume the wages and tips that the driver receives; Papa John’s should know that as well. I think these drivers are being misled into believing they have coverage.
Important note: ask your employer what happens if you are involved in an accident BEFORE you agree to drive your car as a delivery vehicle.
The Franchise May Be At Fault
After some further inquiry, I found that this particular franchise I was dealing with had an insurance policy covering vehicles owned by their drivers while in the course of their delivery duties. Finally, I thought I made it to the right entity. As it turned out, this same franchise owner failed to report this driver to the insurance company as a new driver. I know that with some companies, reporting a new driver results in an additional premium. It is likely the franchise did not want to pay the additional premium, and therefore, the insurance company was not going to pay on this claim.
How Our Personal Injury Attorney's Were Able To Help
My next step was to call the State Farm adjuster and work with their national office to get this claim sent to local counsel. I then spoke with the local attorney, explained the background of what was going on, and urged her to file against the individual franchise. I argued that the franchise was the entity that was making the money from this endeavor and should be held to the risk. State Farm did indeed sue the franchise directly and the franchise realized they had made the error and had no defense. The franchise ended up paying the claim out of its own assets, without insurance. In the end, my new clients never lost their license or registration. Damage to his own car, however, was his own loss.
Important note: If you find that you are being sued for damages after a delivery accident, urge the plaintiff to consider litigation against your employer instead of you personally. An employer generally is held responsible when an on-duty employee negligently injures a member of the public.
What You Need To Know As A Delivery Driver
Every auto policy has several different coverage parts. One covers your liability for damages you could be held responsible for to a third party, if you cause and accident and are sued for the damages, for example. Another part of the coverage is for damage to your car; if your car is damaged in an accident, you can collect from your own insurance for the repair costs, minus a deductible. On this part, typically called collision coverage, there is a similar exclusion if your vehicle is transporting someone or something for compensation.
Companies that write auto coverage, including American Family Insurance, Travelers Insurance, Geico Insurance and West Bend Mutual Insurance, will not pay for repairs to your car if it was damaged while transporting something for compensation.
Delivery Driver Advice & Takeaway Points:
- Assume your personal policy will not cover you while making a delivery. If
your car is wrecked in an accident you cause, your own insurer will not pay
for the repair or replacement.
- Your employer should be verifying with you that they have coverage for your
driving. Make sure you are added to their insurance policy as a new driver.
- If your employer does not provide auto coverage, you are at a significant
risk of being held responsible for damages if you are in an accident, and
also losing your driver’s license and vehicle registrations. Moreover, your
employer’s insurance is not likely to cover damage to your vehicle.
If You Are An Injured Passenger
If you are injured in a car accident as a passenger, you have your own set of rights to recover for injury or general compensation. You have the right to file a lawsuit against the negligent driver, whether that is your host driver or another driver, to recover for your medical bills, lost wages, or other costs. In this delivery driver case example, as a passenger in the delivery vehicle, you are entitled to recover damages from the negligent party, which may be both drivers or one driver and the business at fault. If there is no coverage on the delivery vehicle, you may have a claim for uninsured motorist benefits under your own policy.
How to File a Lawsuit If You Are Hit By A Delivery Driver
If you were involved in a motor vehicle accident with a delivery driver, and the delivery driver was negligent, you have the right to sue for compensation. But it is important to understand that the delivery driver may have no insurance coverage, as referenced above. If their insurance policy does not cover them because they are driving their own vehicle, then you may have to rely on the business insurance policy for the driver’s employer, or even your own uninsured motorist coverage. If however, the deliver driver is driving a company vehicle or is covered on the company's insurance policy, you will have a higher likelihood of recovering damages because that type of insurance policy is designed to ensure coverage is available.
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