The delivery economy: New coverages for drivers and businesses during COVID-19

April 9, 2020 / 3 min read

The COVID-19 pandemic has led to a rapid shift in some quarters of the commercial sector regarding deliveries.

Some restaurants, forced to halt dine-in service due to government actions, are retooling their operations for delivery service.¹ Established “gig economy” delivery services are seeing record orders, and demand for drivers appears to be surging.² Grocery store delivery services are also experiencing unprecedented demand.³

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As these businessowners look to workers to make deliveries in their own personal vehicles, they may be putting their businesses and drivers at risk should the delivery driver be involved in an accident.

A hypothetical

Let’s imagine you’re a restaurant owner who previously served only dine-in customers. In the wake of a forced shutdown of nonessential businesses, you begin to offer home deliveries through an employee driving their personal automobile. While racing across town to fulfill orders, this driver gets into an accident, injuring passengers in another vehicle. The injured parties then sue the driver and businessowner for the actions of the driver.

In this case, the restaurant owner’s businessowners policy may not provide coverage for the actions of the driver, assuming that policy includes a standard auto liability exclusion. Rather, such businesses may want to consider the need for the addition of a Hired Auto and Non-owned Auto Liability (HNO) endorsement to their policy to provide limited liability coverage for the use of a non-owned auto in their business.

ISO’s HNO endorsement is available in all jurisdictions except Illinois, Louisiana, and Vermont.

Personal auto policies are also coming under pressure to account for the rapid spike in deliveries. Several states have required insurers to waive any business exclusion for claims from drivers temporarily driving for a restaurant or other service that previously hadn’t offered deliveries.⁴ Other states have asked insurers to file endorsements under a personal auto policy to generally provide coverage for delivery drivers.

In response to these developments, ISO has made available, on a not-filed basis, a personal auto endorsement that, among other things, extends coverage in the event of an accident in the course of a delivery.

Rapidly changing regulatory landscape

While certain businesses rush to adapt to a surging delivery economy, some state insurance departments are formalizing new coverage requirements.

At least one state has informed insurers that they must cover delivery services for restaurants on personal auto insurance policies and offer an HNO rider on a restaurant’s general liability insurance if requested.⁵ About a dozen states have alerted insurers in various ways to the needs of delivery drivers during this time.

Pete Wells, “To Stay Afloat, the Restaurant Business Clings to ‘Contactless Delivery’” New York Times, March 19, 2020,
< https://www.nytimes.com/2020/03/19/dining/restaurant-delivery-takeout-coronavirus.html?action=click&module=Top%20Stories&pgtype=Homepage >, accessed on March 31, 2020.
Michelle Cheng, “Gig jobs are suddenly looking more secure amid coronavirus,” Quartz, March 18, 2020,
< https://qz.com/1820467/companies-shift-to-hiring-more-delivery-workers-amid-coronavirus/ >, accessed on March 31, 2020.
Ryan Felton, “Grocery and Meal-Kit Delivery Services Seeing Surge in Demand Due to Coronavirus,” Consumer Reports, March 18, 2020,
< https://www.consumerreports.org/online-grocery-services/grocery-delivery-services-meal-kits-see-surge-in-demand-coronavirus/ >, accessed on March 31, 2020.
Elizabeth Blosfield, “How East Insurance Regulators Are Responding to the Coronavirus Pandemic,” Insurance Journal, March 25, 2020,
< https://www.insurancejournal.com/news/east/2020/03/25/562320.htm >, accessed on March 31, 2020.
“Wisconsin Commissioner: Insurers Must Offer Free Coverage for Restaurant Deliveries,” Insurance Journal, March 24, 2020,
< https://www.insurancejournal.com/news/midwest/2020/03/24/562205.htm >, accessed on March 31, 2020.