Want to be a food delivery driver? Check insurance first

This post was originally published on June 5, 2020, and was updated on July 6, 2023.

We’ve come a long way from the days when you could only get pizza – and maybe Chinese food – delivered to your door. Apps like Uber Eats, SkipTheDishes and DoorDash have made it easier than ever to get delicious meals on demand.

All these apps have also created an opportunity to earn money by becoming a delivery driver. When all you need is a driver’s license and a vehicle, food delivery is an increasingly popular choice for people who want to work part-time, new Canadians, and folks who need to earn a little extra cash to get by.

If you’re using your car to deliver food, however, you should know that it can have serious implications for your car insurance.

Do food delivery drivers need special insurance?

Believe it or not, using your car to earn income can void your insurance even when you’re not on delivery.

In January 2022, Ranjan Yadav Vannarathu was driving home when he was hit by a stolen vehicle. The crash caused $15,000 in damage to his 2015 Honda Accord, but his insurance claim was denied after he admitted to having used his car to deliver for SkipTheDishes.

Even though he wasn’t making a delivery when the collision occurred, having used his car to earn income constituted a “material change in risk” to his insurance company. Vannarathu’s claim was eventually approved, but only after they became aware that CTV News was covering the story.

The fact is that using your vehicle for any commercial use – including ride sharing and food delivery – can void your entire insurance policy if you don’t get the right coverage before you start.

Will food delivery companies provide insurance for drivers?

When you sign up to deliver food, the services view you as an independent contractor. Digging through the legalese on their websites, most of them say in about as many words that they don’t care how you get the job done as long as you do it. If you use a vehicle for deliveries, that’s your choice and it’s up to you to ensure you have adequate insurance.

What insurance does Uber Eats provide its drivers in Canada?

Born of a more car-focused enterprise, Uber Eats is the only major food delivery app in Canada that provides auto insurance for its drivers. Depending on where you live, and whether you’re on delivery, you’ll get coverage to either augment or replace your personal policy.

In most provinces with private car insurance systems, Uber provides a minimum of $1-million in third-party liability coverage, $1-million in uninsured motorist protection, actual cash value coverage for collision and comprehensive, and statutory accident benefits. 

This table breaks down what coverage Uber provides depending on where you live:

Uber Eats drivers in British Columbia, Saskatchewan and Manitoba aren’t afforded any commercial car insurance coverage. Instead, they’re advised that their public car insurance policies likely include coverage for a limited amount of commercial use.

Full details on the insurance coverage Uber provides its drivers is available on its website.

Even though Uber may provide you with some insurance coverage, driving for Uber Eats may still cause problems for your personal car insurance policy. Be sure to contact your insurance agent before you start driving to make sure you have the coverage you need.

What insurance does DoorDash provide its drivers in Canada?

DoorDash does not appear to offer any car insurance coverage to its drivers in Canada. While a brief FAQ article on its website makes reference to some “excess auto insurance for Dashers,” but declines to give details on what might be included. The page includes a link to a claims form that, when clicked, says it has “has been deactivated and is closed to any further submissions.”

Meanwhile, the company’s independent contractor agreement makes no mention of any insurance coverage offered by the company. It specifies that drivers are solely responsible for maintaining their own equipment and insurance.

What insurance does SkipTheDishes provide its drivers in Canada?

SkipTheDishes does not provide any insurance coverage to its drivers, noting “You will be solely responsible for any and all liability which results or is alleged as a result of the operation of (your vehicle) including, but not limited to personal injuries, death and property damages.”

What insurance does Instacart provide its drivers in Canada?

Instacart does not provide any insurance coverage to its drivers. Its independent contractor agreement shouts: “Instacart does not provide any (car insurance), you should verify whether your automobile insurance covers performance of your services, not all insurance policies cover such services, and you are not entitled to receive such insurance coverage from Instacart.” (This passage has been de-all-caps-ed for your reading convenience).

Insurance companies don’t have special products for independent delivery drivers – yet

While Canadian insurance companies have mostly figured out insurance for ride sharing, they have yet to create a practical solution for independent delivery drivers. For now, if you want to deliver food using your car, you’ll need to get a type of car insurance called an individually rated commercial auto (IRCA) policy. 

IRCA car insurance provides the same coverage you would expect from a personal car insurance policy. This includes your province’s minimum requirements for third-party liability and accident benefits, along with the option to add coverage for collision insurance, comprehensive insurance, and other optional endorsements. Most IRCA policies also allow for personal use of the vehicle, so you don’t need to keep track of multiple insurance contracts.

How much does food delivery car insurance cost?

In all, expect an individually rated commercial auto insurance policy to cost roughly twice as much as you pay for personal car insurance.

Even though it’s the same driver in the same car, the risks are much higher. When you’re driving for food delivery, the extra time in the car – plus being in a hurry and driving in unfamiliar areas – makes you more likely to be in a collision. Frequently leaving your car unattended while picking up and dropping off orders puts it at higher risk for theft and vandalism. And you’re also exposed to a higher level of liability when using your car to transport goods.

Much like your personal car insurance policy, the cost of food delivery car insurance depends on a wide variety of factors. Your personal driving history, the car you drive and where you live are all taken into consideration when you get a commercial car insurance quote. Your premiums will also depend on how (and how much) you use your car for commercial purposes, the amount of coverage and deductibles you choose, and which insurance company you use.

To get the best deal, compare insurance quotes online to find the best price for the coverage you need.

The bottom line

Food delivery can be a good way to make money, but doing so could leave you with big out-of-pocket expenses if you don’t have the right car insurance. Before you hit the road, compare insurance quotes online to get the coverage you need.

Also read:

• What is high-risk auto insurance in Ontario?
• What does optional DCPD mean for Ontario drivers?
• How to become a freelance writer in Canada
• What is car insurance fraud in Canada?