Your Guide For Delivery Services Insurance
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Depending on the nature of your business, you might offer delivery services. Even if you don't offer delivery services currently, there may be some circumstances where you decide to offer delivery to boost profits or even to remain open in some cases. There could be a crisis that is unavoidable in which you are not allowed to have people come to your premises, or you may learn that you can double or triple your profits by simply offering delivery.
You might take up being a local delivery driver to make extra money or supplement your income if you are laid off due to a crisis, national emergency or any unforeseen event. Local delivery drivers that deliver in a 500-mile radius or less are recommended to obtain delivery insurance regardless of what they are delivering. If the following applies to you, make sure you obtain the proper protection to ensure your deliveries are properly protected should an unfortunate and unforeseen accident occur to you.
Because you only deliver locally, and usually smaller items in fewer quantities, it may seem like you don't need to have insurance that is specific to delivery services. This is not the case. There are an abundant number of situations that can happen when delivering goods to consumers and you must understand them in order to understand why you need insurance.
Personal Vehicle Accident – Some delivery drivers use their personal vehicles to perform their duties. With the popularity of the gig economy, giving people a way to supplement their income even in times of crisis, this is becoming more and more common. What many people don't realize is that the minute you start earning money using your personal vehicle, your personal auto insurance policy will no longer provide coverage in case of an accident. And, if you are the company who is paying the delivery driver, you could be at risk too if the driver causes an accident.
Wrong or Lost Item – We have all heard the stories of things getting lost in the mail, and local deliveries are no exception. Because you are human, mistakes can happen and this is the biggest risk of all. If an item is lost or if you accidentally deliver the wrong one, not every customer is going to be understanding. And, depending on the value of the items, you could be at risk of having to pay a lot of money. Pharmacy delivery is a huge exposure and there are now local couriers doing this job. However, if the wrong prescription is delivered, that could potentially be fatal, and even though you are just the messenger, you could be held partly responsible.
Bodily Injury – Since you are just delivering items, you may not even consider that anyone could be hurt because of it. Well, what if you leave a box in a walkway and someone doesn't see it? They could trip over it and break their ankle. You must understand all of the risks involved (not just the obvious ones) in order to take full advantage of the security that comes when utilizing insurance correctly.
Negligence – Local messengers and local delivery couriers often have confidential paperwork that needs to be delivered, like court documents or legal agreements to be signed. Many things can go wrong here, but one example is that the papers are accidentally dropped and picked up by someone else. Then, that someone else uses the confidential information to steal the original person’s identity. If the delivery service of this unfortunate happenstance can be linked back to you, you will likely be sued for any financial damage that is caused to the victim.
Property Damage – While Property Damage may not be as likely as the other scenarios, it can happen. If you deliver products using a bicycle and don't properly prop up your bike and it falls onto a car, you will be responsible for the repairs. Another likely scenario is if you run into a building or mailbox. The more common problem is if you damage the goods while in transit. This can be especially problematic if it is an heirloom or something of sentimental value to the recipient.
When it comes to the type of insurance you might need for your delivery operations, it could vary depending on what you are delivering and how. That being said, the following types of coverage are necessary for most delivery service operations:
General Liability Insurance – Covering those Bodily Injury and Property Damage claims is General Liability, which is usually the first policy that any business will purchase. Because you are offering the physical distribution of goods, there is always a chance of someone or something getting hurt. And, as a driver, you will likely have contracts with businesses that require you to have General Liability as well. Oftentimes, these contracts will require that any entity you do business with be listed as an additional insured and that you provide a waiver of subrogation in favor of them. Luckily, most companies will be able to offer this at no extra charge by a blanket endorsement. As a business that provides the goods and hires the delivery driver, you will also need General Liability for those cases where the delivery person is the one causing the Bodily Injury or Property Damage. Since they were working for you at the time, you will likely be named in any related lawsuits and it is absolutely crucial for you to stay adequately protected.
Commercial Auto insurance – Personal Auto insurance will almost always deny a claim that involves a vehicle that was being used for business. Commercial car insurance for delivery drivers is essential. As a delivery driver that is using their personal vehicle, you need to make sure that your mode of transportation can be fixed quickly; having the proper insurance will ensure this. After all, your vehicle is how you get your job done and make money. As a business hiring the delivery drivers, you want to make sure you have Hired Non-Owned Commercial Auto insurance. Let's say, and pardon the blunt scenario, that your delivery driver runs a red light and ends up killing a passenger in another vehicle. Certainly, the family is going to seek retribution in the form of money and will not only come after the driver, but your business as well. You can protect your business with this type of coverage. Additionally, any contracts that you sign with businesses or vendors may require additional insured and waiver of subrogation on this policy, which can be endorsed on usually for free as well.
Cargo Insurance – And now to the precious cargo. Damage or loss of the product or goods being delivered is covered here. It is important to know what goods are being transported because if you don't know, then you are unable to determine a value. That means you can't come up with a proper coverage amount. Not only is it essential to have the right kind of insurance protection for your delivery operations, but the correct coverage amount is just as important as well.
Workers Compensation insurance – A business that is hiring drivers as employees is going to need to have Workers Compensation insurance. While many businesses will hire delivery drivers and courier services as subcontractors, or 1099 employees, some are still hiring W2 employees. Most states will require any business to carry Workers Compensation insurance the moment they hire an employee. Plus, if you have employees that suffer a work-related illness or injury, you will want them to be able to get back to work as soon as possible.
Providing Workers Compensation coverage will ensure that this has the best chance of happening by providing them with lost wages and covering the medical expenses that are related to the injury or illness. The employee will be able to continue to support their family while recovering, which usually helps to keep their mindset positive and allows them to get back to work sooner.
There are two main ways to ensure that claims for your delivery service business stay low or, even better, remain non-existent.
The first is to make sure that you hire good drivers with clean records, and that they have training that helps them to understand the risks associated with delivery driving. Just like you are learning about the risks you face so you can better protect your business, they should as well. Your delivery drivers are going to be the face of your business and out there hitting the pavement, so they should be aware of the risks so they can help to mitigate them.
The second thing you can do to help minimize your claims is to have the right insurance in place. Being protected means that you can have peace of mind and a more relaxed atmosphere around you in your business and in your dealings with others. This will transfer to your employees and that will also help them avoid any problems. Plus, having the right insurance ensures that if you do have an unfortunate claim, it will be taken care of efficiently and with minimal harm to the business.
When it comes to insurance costs, there is no one-size-fits-all answer. There are several factors that an insurance company will take into account when pricing the insurance policies, and being aware of what they are may help you to navigate lower pricing.
Interested in exploring your delivery services insurance options? Reach out to CoverWallet today and one of our friendly professionals will help put together a custom-tailored solution that is right for you. Contact us today for your personalized insurance plan and allow us to find the coverage that is just right for you.