Delivery Drivers & Rideshare
Last year's pandemic certainly changed how many of us achieve even basic daily tasks, like having our groceries delivered to our door instead of having to go in person. This created many new types of jobs in the food and grocery delivery industries and thousands of people have been using their free time to make money in the delivery market.
What you might not realize, however, is that the use of your personal vehicle to make money will change your protections from an insurance standpoint. That's because in the insurance world, using your personal assets (like your car) to make money is similar to having a vehicle for business use, and the coverages for commercial use of a vehicle are different from personal use only.
Delivery Driver Insurance
Why do you need a different insurance policy if you're driving your own vehicle? You may end up driving more in different areas that you normally wouldn't drive in (for example, a congested city with more risky intersections). You will also be using your car more than you normally would. Why does your insurance company care about this? Well, it means you're more at risk of getting into an accident, therefore you're more likely to file a claim with them.
So what is it that you need to know if you're using your car to make money? The most important thing is that you get the right insurance. Your personal auto policy will not cover you if you get into an accident making deliveries with your personal vehicle. Your claim will probably be denied no matter how extensive your personal auto coverage is.
You should let your insurance agent know if you're using your vehicle to make deliveries. There are special insurance types for people like you - delivery driver insurance is affordable and not hard to get. This includes if you're driving for Uber Eats, Door Dash, Postmates, GrubHub, Instacart, and more. Depending on your current insurance carrier, you may be able to add an "endorsement" onto your existing personal auto policy instead of having to get a whole new policy.
What if you're not making deliveries, but using your car to transport people, like a taxi? The same rule still applies. If you're making money from using your personal vehicle, your personal auto insurance will not cover any accidents or liabilities.
Some of these ride share companies (like Uber and Lyft, for example) have their own commercial car insurance that you can purchase through them, but we say this: Proceed with caution. Call us to get a free quote on insurance for your vehicle, and compare the coverages to what they offer. They may offer insurance, but you'll want to make sure you're paying for insurance that will actually protect you (not just them!).
Vacation rentals are another type of income that is growing in popularity. Services like AirBnb and VRBO are making it easier to list your extra rooms, pool houses, and even your entire second home when you're not using them. But be aware: you need to call your insurance agent and let them know you're doing this. That's because using your property to make income makes it a business, and will make your regular homeowners policy ineligible for any payouts on claims.
While you may not be required to register with the state as an actual business, that is most certainly how your insurance carrier will classify it. Your personal homeowners or renters insurance will NOT cover damages or liability caused by tenants or guests who are there for you to make income. It requires a vacation rental insurance policy, also called short term rental insurance.
(And yes, before you ask, it will probably be more expensive than your regular homeowner's insurance. But consider this: What will happen to that glorious extra income if some guests destroy property and you're left to foot 100% of the bill?)
Why is vacation rental insurance more expensive than regular homeowners insurance?
Premiums for all types of insurance policies are set by determining the amount of risk involved. Certain types of situations tend to have more claims than others, and for an insurance company, more claims means they're paying out more money to fix problems. Vacation rental insurance is more expensive simply because it tends to get more claims than other types of home insurance policies.
If you're thinking about renting out your property (or even a room in your home), it's wise to give your agent a call and tell them your intentions. They can provide you with a quote free of charge, which you should use when working on your budget for the venture.
Vacation rentals vs. standard long-term rentals
If you're renting a home (or even just a room in a house) for long-term use, your insurance needs will be different than what is described in this article! Short-term/vacation rentals are usually for one night up to one month, and long-term rentals are for one month and longer. However, you will want to ask your insurance agent because different insurance carriers might have different rules for short-term versus long-term rentals.
What do I do if I'm already renting out my property?
It's never too late to call and let us know. Depending on where you are in your insurance billing cycle, we may be able to get you a quote and make the switch for you fairly quickly. Give us a call (804) 270-0406, or contact us here.