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Gig Economy may leave you underinsured

With the rise of the COVID-19 pandemic home deliveries exploded. Companies like DoorDash, UberEats and Instacart experienced exponential increases in orders as the in-person U.S. economy shut down. As home delivery orders rapidly increased, the number of drivers for these companies multiplied to meet demand. Meanwhile during the shutdown, millions of jobs were lost leaving many to scramble to find alternative sources of income. The result for many was to join the gig economy and evolve into a delivery driver bringing in money quickly on a convenient schedule. What many of these drivers may not have expected – the new exposed liabilities created by their new part time profession. Here is what you need to know: Drivers are not covered under their personal auto lines unless specific endorsements are made.

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This is a particular concern not only for new delivery drivers, but also for parents whose high school aged children joined the gig economy for some great side income. Improper coverage can leave parents exposed and not insured properly. Thus, the purpose of us getting this information out to our clients and the investment community.

So, are you covered?

In response to the surge in new drivers, major carriers like Nationwide and Geico offered a limited time endorsement that would cover their auto insurance; clients while delivering items. The catch for those astute enough to contact their carriers and sign up for this coverage? You were only covered until May of 2020. Simply put, unless a delivery driver proactively reaches out to their insurance carrier and requests endorsements be made, they are likely uncovered for a potential massive loss should an accident occur while on the delivery job. We have found that parents are often so relieved their children are taking the initiative to find employment that the insurance coverage aspect is overlooked, creating a potentially massive gap in their personal financial planning.

What coverage does a driver need?

Properly establishing the right coverage amounts and quantity depends completely on the unique risks associated with each driver’s needs and situation. Furthermore, each risk is different and means each risk needs to be covered differently whether you deliver food for DoorDash, deliver food for Dominos, or use your vehicle to ride share. A helpful rule of thumb is that once you use your vehicle as a source of income, your personal auto policy will no longer cover you while receiving income. So keep this in mind next time your child reaches for the car keys to zip out the door to make some money on a side hustle. Even though we wish we could make choosing the right policy simple, picking a coverage is not straightforward. Not only do the risks change depending on the service provided, but each carrier has a different way of insuring these risks, and the difference in coverage and price would astonish you.

People may assume that a delivery driver for DoorDash would have a similar policy under Nationwide as that of Progressive or any other carrier. In actuality, each of these carriers offer completely different coverages for price points on opposite sides of the spectrum. It is interesting that each insurer views coverages differently for the same risk. Working carefully with an independent professional who can lay out, compare and assess the coverages separately is often a preferred route to understand which carrier may offer the best and most cost effective insurance coverage for you and your family.

What does this mean for you?

A growing number of delivery drivers currently believe they are properly insured while on the job. Many of our clients have young adult children jumping into the Gig Economy and grabbing driving shifts to bring in extra income. It is our hope that this article should sound an alarm to proactively review your property and casualty insurance policies. Henry+Horne Wealth Management is here to help with a team of experts to review, recommend and propose on your current insurance protection;(s). Also, given our ability to understand your total financial picture from a net worth and tax perspective, we can bring our innate knowledge of our client’s situation towards recommending the best path forward. We understand the complexities of your everyday life and can custom fit a series of property and casualty insurance solutions custom designed to suit your needs and keep you protected.

Let us know how we can help! Contact; your Henry+Horne Wealth Management advisor for more information on insurance coverage to protect you and your assets.

Brett Carlin