Do Freelance Drivers Need Commercial Auto Insurance?

Freelance rideshare and food delivery drivers have different responsibilities from employees. You must protect your assets and obtain insurance such as commercial auto. Your personal and company vehicles are the same, and an accident can be an expensive headache and put your livelihood at risk. It’s common for freelance drivers to work for multiple companies. Each one has its specifications regarding commercial auto insurance. Do you need your insurance policy, or is what they provide enough? Skip the confusion and keep reading. We’ll let you know which commercial auto coverage you need.

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1. Do Freelancers Need Commercial Auto Insurance?

Ridesharing and freelance food delivery are relatively new industries. It took some time for auto insurance coverage to meet the needs of independent contractors. Most big carriers have revamped their policies accordingly. However, you shouldn’t rely on your auto insurance policy to protect you if you use your vehicle for work-related purposes. Chances are, there’s an exclusion that relieves the carrier of responsibility in the event of an accident. Talk to your insurance agent about your policy before using your car for business purposes. They’ll likely advise you to get a commercial auto policy or add a rider to cover on-the-job accidents.

2. What Does Commercial Auto Insurance Cover?

Your commercial auto policy kicks in when the vehicle you use for your business is involved in an accident. It doesn’t matter if you own or lease the car. If you caused the damage, your insurance policy is responsible for covering the costs.

Most commercial insurance policies provide four types of protection:

1. Collision coverage
2. Comprehensive coverage
3. Bodily injury/PIP coverage
4. Property damage coverage

Let’s break down what each of these terms means:

Collision Coverage

Your policy’s collision terms cover any physical damage to your vehicle. Collision insurance may also cover the damage to the other car, depending on whether you live in a no-fault state.

Comprehensive Coverage

Comprehensive coverage is used when the damage occurred for reasons other than a vehicle-to-vehicle accident. Think of this as your protection against theft, vandalism, and those kamikaze deer that like to jump in front of your car from out of nowhere.

Note: Sometimes collision and comprehensive coverage are bundled under the umbrella term “physical damage coverage.”

Bodily Injury/PIP Coverage

Should anyone get hurt in the accident, bodily injury coverage pays for their medical expenses up to your policy limits. In addition, personal injury protection (PIP) coverage covers your medical payments if you are injured.

Property Damage Coverage

If you’re at fault in the accident, property damage liability covers any repairs to the other person’s vehicle and pays to fix or replace any property harmed. As you shop around for quotes at different carriers, remember you can get cheaper insurance by dropping specific coverage options, like PIP. However, you’ll be responsible for the expenses in the sections you’ve excluded if you’re in an accident.

3. Does My Delivery Job Cover Car Accidents? What About Commercial Auto Insurance?

You’re not technically an employee when you drive for Uber, Lyft, or a similar company. Instead, you’re an independent contractor. While this makes ridesharing and food delivery fun ways to get into the world of entrepreneurship, this distinction lets the company absolve itself from the responsibility of your actions, including car accidents. Nevertheless, some food delivery companies do offer coverage. Of course, the exact amount of coverage provided depends on the company you work for. Since it’s in your best interest to work for driver-friendly companies, here are some famous brands and an explanation of their insurance processes:

Amazon Flex Insurance

Amazon Flex requires delivery drivers to carry their commercial vehicle insurance. The company provides the following forms of coverage if your accident-related expenses exceed your policy limits:

• Liability coverage
• Uninsured/underinsured motorist coverage
• Collision and comprehensive coverage

DoorDash and Postmates Insurance

These food delivery giants cover bodily injury and property damages up to $1 million if you’ve caused an accident while actively delivering for them. You must have the order in your possession when the accident occurs for coverage eligibility. If your insurance has exhausted its limits, DoorDash and Postmates cover the rest of the damages.

GrubHub and Instacart Insurance

GrubHub and Instacart don’t provide drivers with any protection. You must have liability coverage that meets the legal requirements for your state.

Uber Eats Insurance

One of the largest food delivery companies, Uber Eats, takes care of its drivers with a $1 million commercial policy. It kicks in once you’ve accepted an assignment and doesn’t stop until the delivery is in the customer’s possession. The policy will also cover damage from accidents caused while waiting for another delivery. Only if your insurer denies your claim. Remember, most of these companies’ coverage kicks in only after your policy covers a portion of the cost. Your auto policy may not cover the price. So you should have a commercial policy or business rider.

4. Does My Rideshare Job Cover Car Accidents? Commercial Auto Insurance

Uber and Lyft currently dominate the rideshare industry. Still, other, smaller companies are up and coming.No matter which service you work for. If it’s a rideshare company, you’re an independent contractor, not an employee. As such, your insurance must cover at least part of the damage if you cause an accident while actively driving for a rideshare company. However, because rideshare industries are under a magnifying glass of scrutiny, Uber and Lyft are vested in protecting you and your passengers, providing some coverage.

Lyft Insurance

Let’s look in-depth at Lyft’s auto insurance processes for driver-related accidents. Responsibility for insurance coverage is determined primarily by whether the Lyft app was on, active, or off when the collision occurred.

If the App Is Off

When the app is off during the accident, you aren’t technically working for Lyft. So you’ll file your claim through your insurance provider.

If the App Is on, but You Don’t Have a Passenger

If the app is on, but you don’t have a ride in progress yet, your insurance could cover you. They don’t have to. Instead, they can claim you were driving your car for business use. If they deny coverage, Lyft will pay $50,000 per person for bodily injury and $25,000 in property damage protection.

If You Have a Passenger

Say the app is on, and you have a passenger entering or exiting the vehicle, or the ride is in progress when the accident occurs. Their medical bills need to be covered. Your business auto insurance policy is responsible for coverage. Lyft will help where yours leaves gaps (aside from the deductible). Lyft provides up to $1 million in liability insurance, including underinsured and uninsured motorist bodily injury. Since the responsibility for damages in an accident can get confusing, it’s better to avoid too much coverage with your car insurance policy.

Uber Insurance

Uber’s driver coverage policies are similar to Lyft’s, with a few extra optional coverage choices.

Drivers for Uber can upgrade their insurance with the following:

• Low-cost disability insurance
• Zero-deductible medical expenses
• Survivor benefits

Extended coverage is essential for freelancers who don’t have corporate disability insurance and want to minimize their financial impact in the event of an accident.

5. How Much Does Commercial Auto Insurance Cost?

As an independent contractor, you shouldn’t expect the company to cover the costs of an accident. At the same time, you want to save money where you can, like any small business owner. When discussing commercial car insurance, we should mention that investing in a more-than-basic policy is a wise financial move. You don’t want to get stuck with inadequate insurance coverage, especially if the accident is your fault. So how much does a fully-loaded policy cost?

Finding the Best (But Cheapest) Coverage

There isn’t an “average” rate for commercial auto coverage. This is because so many factors determine the final price.

The main factor is the one we discussed earlier: your coverage options. You can always reduce your premiums by setting up a piecemeal policy, choosing this-and-that coverage based on what you think you’ll need. The problem with this kind of approach to your insurance is that Murphy’s Law tends to kick into effect. As soon as you skip collision coverage to get a cheaper policy is when that self-destructive deer will choose to play chicken with your car.

What Other Factors Contribute to Auto Premium Costs?

Don’t start knocking out coverage sections to lower your rates just yet. Many factors impact commercial insurance premiums. Here are a few examples:

• Insurance carrier
• Bundle coverage
• Driving habits
• State requirements
• At-fault or no-fault
• Driving record
• Vehicle type
• Location

We’ll break down each of these factors below:

Insurance Carrier

Various providers will have different rates. Shop for multiple companies’ commercial auto insurance quotes for the same coverage.

Bundled Coverage

If you need multiple types of insurance (homeowner’s, renter’s, personal coverage, auto, etc.), you can get discounts for buying all of your policies from one provider. In addition, you might consider getting a business owner’s policy (BOP), a bundled package for small businesses. However, these packages tend to include much coverage and might be overkill for your type of business.

Driving Habits

Insurance companies want to know how often and far you typically drive. Therefore, people who go more are considered at higher risk. Conversely, sticking to a smaller vicinity lets you claim fewer miles, which may reduce your premiums.

State Requirements

Every state has different requirements when it comes to business vehicle insurance. As a result, your policy might be more expensive on one condition because you must have a specific type of coverage not needed in another state.

At-Fault Versus No-Fault

States with no-fault coverage, like Florida and New York, tend to be more expensive than at-fault states. This is because the driver who caused the accident must cover all damages in an at-fault state. In no-fault states, the driver of each vehicle is responsible for the damages, regardless of who caused the wreck. Therefore, no-fault state carriers have higher costs passed down to the insurance policyholder.

Driving Record

The more accidents and tickets you have associated with your driving record, the higher your premiums will be, no matter where you go. This is because you’re considered a “risky driver” to insurance companies underwriting your policy.

Vehicle Type

Driving certain vehicles can make you more or less susceptible to higher policies. Insurers have a list of safer cars and, therefore, less expensive to cover in an accident. Before buying a new car, consider investing in one that will reduce your insurance premiums. Avoid the most expensive types of vehicles.

Location

Your final rates also include some characteristics you can’t do much, if anything, about. For example, commercial auto insurance policy prices depend mainly on the location and the average cost of an accident there.

6. What Other Insurance Do I Need as a Self-Employed Delivery Driver? Commercial Auto Insurance

Commercial auto insurance isn’t the only coverage you need as a self-employed person. Unfortunately, you don’t have employer policies to fall back on. So it’s up to you to obtain all of your insurance yourself. Luckily, there’s Selfgood to point you in the right direction. The Selfgood platform is designed to help independent contractors like yourself to find everything you need to build a successful freelance business, such as health insurance.

When you have medical coverage, you’re more likely to go to the doctor for preventative care, reducing your need to take unpaid sick days. Selfgood’s partnership with the Alliance of Gig Workers lets you take advantage of the lowest rates on health insurance. In addition, your Alliance of Gig Workers membership comes with other benefits, including discounts on legal advice, office supplies, and other goods and services. It’s an investment that more than pays for itself.

Sign up for Selfgood’s freelancer benefits today!

Conclusion – Commercial Auto Insurance

You need to protect your livelihood. As a freelance driver, this means protecting your assets if you’re in an accident with your covered vehicle.

Use this guide and your Alliance of Gig Workers membership to set yourself up for success in your new career journey.