Haris Ashley
If you're thinking about becoming a DoorDash driver, it's important to consider how it might affect your insurance. While DoorDash itself does not require you to upload insurance documents or actively verify your insurance coverage, having adequate insurance is critical. Failing to inform your insurance company about your DoorDash activities could result in your policy being cancelled and claims denied. Additionally, while DoorDash provides third-party liability insurance, it only covers damage to other people's property and injuries, not your own vehicle. So, what are your options? You could add business-use coverage to your personal driver policy, switch to an insurance company that offers rideshare coverage, or purchase a separate commercial policy. Each option will impact your insurance differently, so it's important to carefully consider your choices and comply with local and state laws.
| Characteristics | Values |
|---|---|
| DoorDash Insurance Requirements | DoorDash requires drivers to maintain their car insurance if making deliveries by car, meeting or exceeding state and local coverage requirements for a delivery driver. |
| Insurance Company Requirements | Insurance companies may require drivers to purchase additional coverage for driving for DoorDash. Failure to do so may result in policy cancellation and denied claims. |
| Insurance Cost Increase | Adding business use coverage to a personal driver policy can increase costs by $6 to $46 per month or more, depending on various factors. |
| Commercial Policy | A commercial auto policy may be more expensive but can provide coverage for food delivery, which may not be included in a rideshare add-on. |
| Rideshare Coverage | Some insurance companies offer rideshare coverage as an add-on to a personal car insurance policy, while others require a separate commercial policy. |
| Insurance Options | Insurance options like Allstate and State Farm offer rideshare coverage, while GEICO does not. |
| Part-Time vs. Full-Time | Commercial coverage may not make sense for part-time dashers or those using their vehicle for deliveries and personal use. |
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What You'll Learn
Insurance costs for DoorDash drivers
If you're considering becoming a DoorDash driver, it's important to understand the insurance implications. While it's a great way to earn some extra cash, it's critical to have the right insurance coverage in place.
Firstly, it's important to note that you need to have valid auto insurance to drive for DoorDash. However, your personal auto insurance policy may not cover you if you're using your vehicle for delivery services. This is because delivery driving is typically excluded from personal auto insurance policies. As a result, if you get into an accident while making a DoorDash delivery, your insurance company may not cover the costs, and they could even cancel your policy. Therefore, it's crucial to contact your insurance provider and inform them of your DoorDash driving.
You have a few options when it comes to insurance as a DoorDash driver. One option is to add business or DoorDash driving to your existing personal auto insurance policy. This is often the easiest way to ensure you have the necessary coverage, but it may not be the most cost-effective. The additional cost of adding this coverage can vary depending on your insurance provider, with some charging as little as $6 per month, while others may charge around 15 to 20% of your existing premium cost.
Another option is to switch to an insurance provider that offers specific coverage for rideshare or delivery drivers. Some popular choices among DoorDash drivers include State Farm, Geico, Progressive, and Allstate. These companies offer different benefits, such as affordable rates, flexible policy options, and comprehensive coverage. For example, Geico offers rideshare coverage for multiple delivery apps across 40 states at a rate of around $100 per month. On the other hand, Progressive offers on-demand delivery coverage and deductible reimbursements in some states.
Additionally, some insurance providers have initiatives to encourage and reward safe driving habits, which can help DoorDash drivers save money on their insurance costs. For instance, Progressive's Snapshot program incentivizes safe driving, potentially resulting in significant savings. Similarly, State Farm's Strong Claims Support initiative promotes safe driving habits and cuts costs for drivers over time.
While it may take some time to shop around for insurance as a DoorDash driver, it's worth comparing different providers and their rates to find the best option for your needs. By considering factors such as coverage options, provider reputation, and cost, you can ensure you have the necessary protection while managing your expenses effectively.
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The impact of mileage on insurance rates
The number of miles you drive in a year affects your insurance rates because it predicts your likelihood of filing a claim. The more miles you drive, the higher your insurance rates will be. This is because the more time you spend on the road, the more likely you are to be involved in an accident.
According to a Verisk analysis, vehicles driven less than 3,000 miles annually are involved in 40% fewer claims. In contrast, cars driven 20,000 miles or more annually record 31% more claims. Insure.com found that a policy with 20,000 miles or more driven annually is 36% more expensive than a policy for 5,000 miles or fewer per year. The average American drives 13,476 miles per year, according to the Federal Highway Administration's 2022 report.
Insurance companies have their own criteria for setting rates, and some offer discounts for low-mileage drivers. For example, insurers typically offer discounts for drivers who log less than 7,000 miles annually. Some insurers only ask about the length of your commute, while others ask for your estimated annual mileage. If you drive infrequently, you may qualify for low-mileage insurance, usage-based insurance, or pay-per-mile insurance.
However, mileage is not the only factor that determines insurance rates. Your driving habits and vehicle usage also play a role. For example, if you commute into a busy city, you may have higher rates due to the increased risk of an accident, even if your mileage is low.
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Third-party liability insurance
DoorDash provides third-party liability insurance to its drivers, which covers up to $1 million in damages. This insurance only applies if the driver is actively driving and has food in the car, and it only covers damage to third-party property or persons. It is important to note that DoorDash's insurance does not cover damage to the driver's own vehicle. Additionally, DoorDash's insurance will only kick in if the driver's personal insurance company denies their claim. This creates a gap in coverage that many drivers choose to fill by purchasing additional insurance.
The availability and requirements for third-party liability insurance can vary by state and insurance carrier. Some insurers will cover DoorDash drivers if they purchase a rideshare add-on, while others may require a separate commercial policy. It is important for drivers to carefully review their insurance policies and understand what is covered and what is not.
In some cases, insurance companies may deny coverage for drivers who are using their vehicles for gig work. It is crucial for DoorDash drivers to disclose their work to their insurance providers and ensure that they have the proper coverage in place. Without the appropriate insurance, drivers may be left financially responsible for any accidents or damage that occurs while dashing.
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Commercial vs. personal insurance
If you are a DoorDash driver, it is critical to have good car insurance. While DoorDash does not require you to upload insurance documents, it is important to acquire coverage to comply with local and state laws.
Commercial Insurance
Commercial insurance is designed for businesses or those with a fleet of cars used for business purposes. If you are in an accident while on an active delivery, your personal insurance policy will not cover you. Commercial insurance is more expensive than personal insurance, but it provides coverage for accidents that occur while delivering for DoorDash. Some companies that offer commercial insurance for DoorDash drivers include Progressive Commercial and State Farm.
Personal Insurance
Personal insurance policies typically do not cover accidents that occur while delivering for DoorDash. Some insurance companies, such as Geico, Allstate, and State Farm, will not cover DoorDash driving at all. Others, like Progressive Personal, offer an endorsement addition to cover gig work, but it does not cover all vehicle types.
DoorDash Supplemental Insurance
DoorDash offers supplemental insurance coverage, meaning they will cover the excess cost to what your policy covers. However, this is only applicable if you have a commercial policy. If your personal insurance denies the claim, which they likely will if they know you were dashing, DoorDash will not cover the costs.
Business Use Insurance
If you are using your personal car for deliveries, you may only need business use insurance. This can be added to your personal driver policy, and the cost will depend on your current rates, zip code, driving record, insurance provider, and other factors. In some cases, switching to a different carrier may result in better savings.
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Rideshare insurance endorsements
If you're a rideshare driver, your personal auto insurance policy may not cover you while you're on the job. Ridesharing companies often provide insurance for their drivers, but this coverage may be limited to certain situations, such as when you have a passenger in the car or are driving to pick someone up. This leaves gaps in coverage, particularly when you're logged on and waiting for a ride request.
This is where rideshare insurance endorsements come in. A rideshare endorsement is an additional policy that you can purchase from your insurance provider to fill these gaps. It ensures that you're covered while you're signed on to the app and waiting for a fare. This type of endorsement is typically offered as an add-on to your personal auto insurance policy for an extra monthly fee. The cost of a rideshare endorsement can vary depending on the provider, your driving record, the type of vehicle, and your location, but it usually adds between 10 to 20% to your premiums.
It's important to note that not all insurance companies offer rideshare endorsements, and some may only offer them in certain states. Before starting to drive for a rideshare company, you should contact your insurer to see if they offer this type of coverage. If they don't, you may need to switch to a company that does or consider a commercial auto policy, which can be more expensive.
Some insurance companies that offer rideshare endorsements include Progressive, Allstate, and USAA. Progressive, for example, reimburses rideshare drivers for the difference between their personal deductible and the deductible required by the ridesharing company. Allstate's Ride For Hire endorsement works similarly, allowing you to pay your chosen deductible instead of the higher amount set by the rideshare company. USAA offers a rideshare endorsement for as little as $6 a month for military members, veterans, and their families.
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Frequently asked questions
Yes, it is important to inform your insurance company if you start delivering for DoorDash as your rates may increase due to increased mileage and higher chances of collisions.
Many insurance companies offer inexpensive policy add-ons for ridesharing or commercial use. For example, State Farm offers rideshare coverage for an additional 15%-20% premium, while Mercury offers rideshare insurance for $27 per month.
If you do not inform your insurance company and purchase additional coverage, they may cancel your policy and deny your claims in the event of an accident.
