Business Insurance

Does "business use" vehicle insurance cover food delivery drivers?

There's a lot of confusion regarding food delivery insurance, particularly whether or not "business use" car insurance is sufficient. Spoiler Alert: It's usually not. Below we explain why.

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Why business car insurance is not for delivery drivers

'Business use' car insurance does not cover food or other delivery drivers who are paid per delivery. There are three classes of business use car insurance, and none of them cover drivers who are paid for making deliveries.

Classes 1 and 2 only cover driving between multiple places of work (but where the driving just gets to you the place where you do the work you're paid to do)—for instance, a self-employed physical therapist who drives to and from clients' homes or between multiple clinics for work would need business class 1 (or class 2 if they expand cover to include a coworker or employee).

Some people mistakenly say that Business Class 3 covers delivery drivers, but it does not. Business Class 3 covers 'commercial travelling' such as long-distance driving to make business calls without prearranged appointments. Travelling salesmen use Business Class 3; food delivery drivers do not.

Note: This article is meant to be educational only. Terminology and policy wordings can vary from one insurer to the next, so in all cases you must discuss your work with your insurer to make sure you're covered. Don't rely on what you read online or assume you are covered. If your current insurer can't cover your delivery driving, talk to a broker. If you don't have a broker, fill out a form here.

What type of vehicle insurance do I need for food delivery?

Anyone driving their vehicle to make paid deliveries needs to arrange delivery driver insurance. Specifically, this is a form of commercial vehicle insurance called 'hire & reward' is what you need as a delivery driver—whether for fast food, takeaway, or parcel delivery.

Here is where the terminology gets confusing. While 'business use' vehicle insurance does not cover delivery driving, a form of 'commercial' vehicle insurance does. Some people use the words 'business' and 'commercial' interchangeably, but when it comes to insurance they mean very different things.

Where can I get insurance for food delivery?

Your existing private car insurer is unlikely to cover delivery drivers. But you must by law inform your current insurer if you take on delivery work—you can then ask if they'll expand your coverage. If they won't then you can either:

  • Buy a top-up, pay-as-you-go type of courier insurance to use when making deliveries (assuming your existing provider will accept you doing that and still cover your social, domestic and pleasure driving—you must ask about that, too) or
  • Buy a new specialist policy that will cover both your delivery driving and your social driving

To get a quote from a delivery driver specialist, click here to fill out a short quote form. Up to three insurance providers will contact you to proceed with the quote and answer any questions you still have.

Plus you may need public liability insurance

If you are a self-employed delivery driver then you should also take out public liability insurance. Public liability insurance covers legal costs and compensation payments if a third party (like a customer) claims you've caused them accidental injury or damage and sues you.

For example, if when you're handing over a bag of spaghetti bolognese the bag breaks and the pasta lands with a splat on a customer's white carpet, they could claim you're responsible for paying to replace carpet and sue you for damages.

If you are an employee of another company (e.g., you are employed by and only deliver for a local restaurant) then you are probably covered by their public liability insurance, but always ask to be sure.

Erin Yurday

Erin Yurday is the CEO, Co-founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.

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