Insurance for the Gig Economy

By Diane Tait

Image courtesy flickr

So, you’ve decided to augment your income by either picking up passengers, delivering groceries or taking on contract writing assignments.  Good for you.  Working as an independent contractor can have its rewards.  In many cases you get to set your own pace, work when you want to work and avoid the dilemma of having your boss breathe down your neck all day long.  There are also added tax write-offs and other perks involved with running your own business.  The downside is that there can be added expenses and increased liability to deal with anytime you go from working for someone to working for yourself.  Today I thought I’d take the time to help all you indies out there understand the insurance ramifications inherent in dealing with the Gig Economy.

Do you use your vehicle for business purposes? – Like it or not, there’s a world of difference between personal auto insurance and commercial insurance like that used by Uber, Lyft and DoorDash delivery drivers.  In fact, many personal auto policies contain specific exclusions that invalidate coverage if you use your auto as a limousine or to make regularly scheduled deliveries for a third party.  Even many states mandate that taxi and delivery drivers who use their own vehicles carry increased insurance coverage.  Have an accident while driving a fare or making a delivery with a standard auto policy and you could wind up footing the bills yourself.  That’s the bad news.  The good news is that many insurers have crafted commercial policies specifically for those who choose to participate in the Gig Economy.

Image courtesy flickr

Delivery and limo drivers can sometimes get by with what is deemed a business use policy.  This is less extensive than a commercial auto policy, but it’s also less expensive.  Business use policies are crafted for individuals who use their personal auto to deliver goods or transport people from time to time for a fee but whose vehicles aren’t used full-time for either task.  This means I you want to use your ride to work part time for Uber or GrubHub, this kind of policy might be just the ticket.  Additionally, a business use policy would also apply if your side gig requires you to transport goods, equipment or tools to carry out business.  This means if you’re a Mary Kay or Amway distributor who regularly transports samples and/or orders to your downline, a business use policy would cover you should your vehicle get broken into and your inventory wind up being stolen.

However, if your business has progressed to the point where you own or lease a vehicle specifically to do business, you should look into acquiring a commercial auto policy.  This kind of policy not only covers you and the vehicle, it would also apply if you let other people in your employ use the company vehicle for either business or personal use.  Most businesspeople are shocked to learn that if they let a staffer use the company car to pick up supplies or lunch that the company is on the hook should the employee be involved in an auto accident. 

Some taxi and delivery services require increased coverage for their drivers.

      1.      Amazon Flex requires all their drivers to carry a personal auto policy which it augments by purchasing a commercial auto policy for them.  (with the exception being New York.)

      2.      DoorDash provides commercial coverage for all its drivers that includes $1 million in bodily injury and property damage.  Just as with Amazon Flex drivers, the company requires all drivers to carry a personal policy.

      3.      Instacart doesn’t purchase insurance for its drivers.  Their drivers are required only to carry personal auto insurance.

      4.      Uber and Lyft drivers should be aware that state law may require them to have commercial auto insurance to drive for either service. Fortunately, both rideshare services work with their drivers to help them acquire the coverage they need to meet state and federal standards. Since Uber also offers a delivery service called Uber Eats, they also offer insurance coverage specifically designed to cover drivers who wish to participate in both their rideshare and delivery programs. 

       

      5.      As with any delivery or rideshare program, make sure you read what the company does and doesn’t cover.  Better still would be to discuss your situation with your insurance agent.  The last thing you want to have happen is to get into a situation that neither your personal nor your business policy fails to cover.  That would make it the gig from hell.

SOHO so what?

Image courtesy needpix

Small office/home office workers can also fall into a gray area if they aren’t careful.  If their gig requires them to meet or see customers in the home, a homeowner’s policy won’t cover them should a customer wind up slipping or falling on their property or being mauled by the homeowner’s dog.  Most homeowner’s policies won’t cover office equipment against theft, fire and water damage if they’re housed in your home. The sad fact is that many homeowner’s policies that have limits as low as $2,500 for electronics and even limits as low as $250 for devices that are lost while away from home. 

If your home contains business financial records, customer data and other sensitive documents, your current homeowner’s policy makes few if any provisions should they be lost, stolen or destroyed.  It also has no provisions should you be sued for libel, copyright or trademark infringement, errors and omissions or a whole host of other business liability issues that you may not even be aware of.  If this concept makes you cringe, it shouldn’t because many insurers offer endorsements that allow SOHO owners to increase the scope and breadth of their homeowner’s policy to cover most home businesses.  Another way around the SOHO blues is to secure an insurance policy called a BOP that provides general liability and commercial property coverage  designed specifically for small business owners.  A BOP is especially handy if you see customers in your home or have frequent visits by delivery drivers or couriers.  If you don’t feel you need additional property coverage, you can also opt for a general liability policy that picks up where your homeowner’s insurance leaves off. 

Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on insurance, go to her site or fill out the form at right.