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Keven Moore: Adapting to social distancing orders come with new risk for restaurants

As restaurants and other industries adapt to social distancing orders to stop the spread of the coronavirus, many have had to adjust the way they interact with their customers and provide their services.

Such tactics are necessary to stay afloat financially, but it’s important to point out that you may be opening up a whole new set of risk exposures to your customers, employees and to your company, that can lead to expensive and unanticipated losses that may or may not be covered on your commercial insurance policy.

If you have made significant changes as to how you’re peddling your services and goods to your customers, I would highly recommend that you reach out to your insurance broker to have them review to ensure that you have the appropriate coverages and if additional endorsements need to be added to your policy. Any good insurance broker should have already called you by now, and if he hasn’t, he/she isn’t earning your business.

The restaurant industry has shifted away from dining services and is now offering only drive-thru, carryout and/or delivery, which drastically altered their risk exposures. Such changes create all kinds of questions and concerns — Are my drivers insured under my current commercial insurance policy? What employee procedures and policies should I develop for delivery? Will my drivers accept cash payments and how do I protect my drivers from robbery attempts? How do I protect my food from spoilage?

In the state of Kentucky, Governor Andy Beshear issued an Executive Order to close all restaurants and bars to in-person traffic. These facilities were given the option to remain open for drive-through, delivery, and in some instances, carry out.

To maintain their business operations and avoid laying off additional employees, businesses that do not normally offer delivery may begin to offer such services, and employees who do not typically deliver food may be providing delivery services temporarily using their own insured personal vehicles.

Personal automobile insurance policies do not typically provide coverage for vehicles used for commercial purposes. I know this for a fact because back when my son started to deliver pizzas while in college, and we were forced to go out and find a personal insurance carrier that would cover it.

To ensure that those providing temporary delivery services have coverage under their personal automobile insurance policies, Governor Beshear’s executive order states that “insurers shall not deny a claim under a personal automobile insurance policy solely because the insured was engaged in delivery services on behalf of a business impacted by the closures necessitated.”

This guidance shall apply to all personal automobile insurance policies in effect on or after March 16, 2020, and shall remain in effect until the Governor’s Executive Order is lifted, in whole or in part, to permit restaurants and bars to resume normal operations. This guidance does not apply to drivers working for a transportation network company or similar delivery company.

It’s important to note that this does not exempt restaurant from any liability, it only means that if one of their delivery drivers is involved in an accident, that the driver’s insurance policy becomes primary, and that the restaurant insurance policy becomes secondary. But that is only if you have Hired and Non-owned Auto Coverage added to your policy.

Several commercial insurance carriers are now temporarily offering “Hired and Non-owned Auto” coverage to restaurant policyholders, but you will need to check with your insurance broker to verify that it is offered and has been added.

To better protect your restaurant, I would highly recommend that you require all your new drivers to carry more than the bare minimum car insurance requirement for Kentucky drivers is: $25,000 bodily injury per person per accident. $50,000 bodily injury for all persons per accident. $10,000 property damage liability. I would recommend that you at least require $100K/$300K/$100K limits for your delivery drivers so that their auto coverage can carry a larger share of losses, in the event of an automotive accident before your hired non-owned auto policy kicks in.

Then the next question that comes up is how are you selecting your drivers? Are you just allowing any and all of your employees’ to drive for you? How many of your new delivery drivers have DUI’s on their record or have a poor driving history? How many are driving on suspended driver licenses that you are unaware of? If you can’t answer these questions with a certain degree of certainty, then you are at a huge risk.

To avoid this huge negligent entrustment exposure which could exceed into the millions of dollars, you must carefully select your drivers. You can do this by establishing a matrix of an acceptable driver based on the number of accidents and violations that your insurance carrier would approve over three years.

To accomplish this, you will need to go to your state’s Department of Transportation (DOT) website and order individual Motor Vehicle Records (MVR’s) for each driver. The cost for MRV’s vary by each state but will range from $5 to $9 for each MVR ordered. To order an MRV you must also have the driver’s permission and must require his personal information run an MRV.

Your insurance broker can also submit a list of your drivers to your insurance carrier and they can tell you if they are approved to drive or not, but they cannot tell you why due to privacy reasons.

Another concern is, are these vehicles being used to make deliveries safe and road-worthy? What happens if something goes wrong mechanically and causes your delivery driver to have an accident? If you don’t have any controls in place to verify the vehicles roadworthiness, restaurant owners can be on the hook for another negligent entrustment lawsuit.

Another question an opposing attorney representing an injured party will ask if your delivery driver caused those injures is what type of training did you provide your drivers? Did you offer defensive driving or distracted driving training, and what proof can you offer that proves that the training occurred?
You must also educate your drivers that they are required to adhere to all traffic laws and responsible for their own driving behavior. I know that this may seem elementary, but when drivers are working on tips or delivery deadlines, they are more inclined to speed and break traffic laws. Therefore, they must be reminded and trained, and you should never offer any delivery time guarantees.

Then what happens if your delivery driver is later found to be texting and driving and was involved in a very serious accident while delivering for you? Well did your restaurant have no cellphone usage policy in place and did your employee acknowledge that he read and understood it with a signature? If not then you are at risk.

Keven Moore works in risk management services. He has a bachelor’s degree from the University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He is also an expert witness. He lives in Lexington with his family and works out of both Lexington and Northern Kentucky. Keven can be reached at kmoore@roeding.com

It’s an unfortunate fact of life that delivery drivers make attractive targets for robbers and this endangers your driver’s safety. Are they carrying cash and if they are, then how much? If they are making multiple deliveries on one run, they could be carrying in excess of two-three hundred dollars at any given time, making them a prime target for armed robbery.

To better control this you should only take online orders and accepting online credit card payments. If cash payment must be taken, drivers should be required to make frequent deposits to limit the amount of cash being carried by the drivers. You should also advertise online and the drive-thru windows that your drivers carry very limited about of cash and will not be allowed to accept large bills.

Then what about drivers slipping and falling, getting bitten by dogs or getting injured in a car accident? Well, that is going to be a worker’s compensation claim and is hard to control.

The key point that I am making is that you are no longer just a restaurant anymore, you are a restaurant that now delivers and you must adapt to these new exposures and put in all the necessary controls in place to better protect your customers, employees, assets and your bottom-line.

To transfer this risk exposure, many restaurant owners and operators have instead opted to employ the use of online services such as Ubereats, Grubhub, DoorDash …etc to handle the delivery function of this new world order that we are living in.

Nonetheless using online delivery services does not come risk-free. These contracts are not very friendly to the restaurants and many will state that the third-party is only the supplier of software to connect with a delivery partner and therefore, it assumes no liability if something happens when food is sent through that delivery partner.

So read these contracts and discuss what is the best option for you with your trusted insurance broker.

Be safe and healthy my friend.

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