March 23, 2020 by Adam Malik
Governments have forced restaurants, pubs and similar businesses to offer pick-up and take-out services. But as demand for delivery surges, the question must be asked: Do drivers have proper business insurance coverage?
“Anytime you’re using your vehicle for a business purpose, anytime you’re turning your car from a private passenger vehicle into a commercial, money-making enterprise … that use needs to be noted by your insurance company so they are aware of your changing risk,” said Pete Karageorgos, director of consumer and industry relations at Insurance Bureau of Canada. And, he added, it doesn’t matter if the delivery is parcels or food.
Delivery volume is expected to surge. A portion of the 10,000 workers Walmart Canada wants to hire as a result of the COVID-19 pandemic is to meet delivery demand. Pizza giant Dominos, where delivery makes up 55% of its orders, announced similar intentions.
IBC wants the message out there: If customers are planning to become delivery drivers for whatever reason — make money on the side or find new work because they’ve been laid off — they have to let their insurance company know about it.
“The word needs to get out. We continually try to reinforce that message and it may be something that, as an industry, we really need to highlight again for people,” Karageorgos told Canadian Underwriter. “Given that insurance companies are still operating, albeit remotely in many cases, they and brokers as well still have the ability to service customers and make changes.”
Brokers need to explain to clients that they can expect a rate change if they change the use of their vehicle, Karageorgos said. “If you are a person who is now using your vehicle, which you have in past driven to and from work – and you’re on the road more because of this – yeah, that would translate to a higher risk. And a higher risk typically translates into a higher rate in premium.”
Half a million people applied for Employment Insurance following new federal government measures announced last week (compared to the usual 27,000). With people pressed financially, what are the chances clients are honest about their vehicle usage due to fears of higher premiums?
That’s always a concern no matter what the economic situation may be, Karageorgos observed.
“Insurance is based on the principle of utmost good faith and that requires the client, the insured, to notify their insurer of any changes to their driving habits [and] to their risk factors,” he said. “It’s up to insurance professionals to educate people and advise them of why it’s necessary to call in the change — and to outline the possible repercussions if that doesn’t happen and there’s a claim.”
Karagorgos said he’s less concerned about a situation in which the business owner could decide to handle deliveries amid rising orders. They likely have proper policies. “It’s those people who may not be taking the time to do their homework,” he said. “How do we reach those people? That’s the key challenge: Reaching those people [to let their] brokers know.”
Editor’s note: There’s more on this story to come. We’ve reached out to various experts and will provide additional coverage on this topic as more information becomes available.