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Keven Moore on Insurance: Read the fine print when using personal car for business

As a trained risk-ologist and someone who worked his way through college delivering pizzas, imagine my surprise when my insurance agent told me that my own pizza-delivering son would not be covered if he was involved in an accident while on the job.

How could I have missed this exposure?

Turns out, many auto insurance carriers exclude business use of personal vehicles, such as for delivering pizzas, flowers, sub sandwiches and groceries. As a result, there are tens of thousands of part-time delivery drivers riding around your streets today without coverage because of this exclusion on their auto insurance policy.

After the initial shock wore off, I moved my homeowners, auto and umbrella policy over to a different carrier that did not exclude such activities and allowed part-time business use of a personal vehicle.

(Photo provided)

(Photo provided)

What you need to know

Pizzerias that deliver are not going to come out and tell you that your auto insurance carrier will probably exclude you from their policy and that you are delivering pizzas without any insurance coverage. So it’s up to you to call your insurance agent to verify coverage. If you or your teenager is currently employed or is considering taking a job as a pizza delivery person, there are a few things you should know before taking the position:

• If you’re driving a company-owned vehicle owned by the pizzeria, the liability for an accident falls to the company. However, all moving violations accrue to your own driver’s license. I learned this fact the hard way after earning two reckless driving tickets 60 days apart when I was 19 years old.

• The majority of insurance companies will not cover pizza delivery drivers; and those few that do will cover pizza delivery if the job is part-time and the policy is coded to include business use.

• Many pizzerias require certificate of insurance as proof of insurance from their drivers, but many do not go that extra step to ensure that they truly have coverage leaving them exposed to a huge insurance gap, which will very likely come back to haunt the pizzeria. My guess is that most pizzerias are uneducated or actually choose not to inform their drivers that they are driving blindly without any insurance coverage. For fear that they would not be able to keep drivers on their payrolls. If drivers are unable to secure coverage through their personal lines insurance carrier, then the only other option would be to secure a commercial policy, which was quoted as $5,000 for my son, which really isn’t an option.

• Many may be tempted to be less than honest with your insurer, but unfortunately you are legally required to inform your insurer of any changes to your policy which would include new employment as a delivery driver. Failure to do so would more than likely result in denying your claims and a dropped policy when the company investigates if you are involved in an accident.


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• If you are like me your initial instinct is to expect that your extra layer of insurance in the form of an umbrella policy would protect you your family assets, but that isn’t the case either as many will deny coverage as well since it is probably written through the same insurance carrier.

• You have the option of placing the vehicle in your kid’s name and finding him is own policy and playing dumb after an accident occurred and you learn that it was excluded. But doing so would cause the policy to double and you could still be on the hook; this varies by state. In most states, including Kentucky, parents could still be held responsible for the actions of a child. If the child is living at home and is listed on the parents’ tax returns as a dependent. So it’s possible that the parents could be held liable even if the car is in the child’s name.

Who pays the claim?

In this litigious society, whoever has the money is who pays the claim. Attorneys will prefer to sue the employer with deeper pockets and more coverage, rather than the minimum-wage college driver working on tips without coverage because of the exclusion.

While the outcome of delivery-related lawsuits can be painful for a large company, for a mom-and-pop outfit it could be disastrous. Many of the smaller companies that deliver could very well be completely uninsured or drastically underinsured, believing that the accident would be covered by the delivery driver’s insurance carrier.

We cover a large pizza franchisee in the Cincinnati market and to combat this possible insurance gap, our agent has all their drivers with their own vehicles listed on their excess non-owned auto policy. This allows the delivery drivers’ insurance policy to become the primary coverage and the pizzeria’s policy becomes secondary.

With excess non-owned auto coverage on their business policy, the operator is covered for its portion of the liability judgment if a driver causes an accident and the claimant sues both the driver and the pizzeria.

But this doesn’t leave the driver in the clear, as victims are entitled to recovery from anyone that is negligent. The injured party’s attorney can and will go after your personal assets, or in many cases the parent’s personal assets.

The takeaway for me is that everybody should get in a habit of pulling out your homeowner and auto insurance policies and re-read them periodically. As things change in your own life that may be excluded on a policy or may need some other form of additional coverage. That’s a lesson even I had to learn.

Be safe, my friends.

Keven Moore is director of Risk Management Services for Roeding Insurance (www.roedinginsurance.com). He has a bachelor’s degree from University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He lives in Lexington with his family and works out of both the Lexington and Northern Kentucky offices. Keven can be reached at kmoore@roeding.com.


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