New law fills vehicle insurance gaps for Indiana gig workers delivering food, other products

People who drive their personal vehicle as a contractor for Uber, GrubHub and other similar networks might not be covered by personal insurance while working on the road. A new law aims to ensure fuller coverage.

Depending on the insurance policy or provider, drivers’ personal coverage may not kick in if they get in an accident while working for a gig-based delivery or transportation company.

Typically, drivers who use their own vehicle or a company vehicle to make deliveries or transport people as an employee are covered by their employer’s insurance policy for any driving they do on the clock. This would include, for example, a driver who is employed by an individual restaurant part-time to deliver pizzas. When that driver is not working, they’re covered by their personal car insurance policy.

Drivers who do similar work for apps like Uber, GrubHub and Instacart face a much more complicated insurance system because they’re contractors, not employees.

Some insurance companies do offer policies that cover drivers while they work a gig, but many explicitly won’t cover drivers using the vehicle to make money as a contractor.

Insurance agent and state Rep. Matt Lehman (R-Berne) said companies often already insure contracted drivers while the customer or product is actively in the car. That’s true for Postmates and Uber, which actually goes beyond that.

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But, according to AutoInsurance.org, GrubHub generally doesn’t offer coverage to drivers, even while actively making a delivery.

But, even for the companies that offer full coverage during the course of a delivery, there was still a gap, Lehman said.

“It was on my way to pick you up,” he said. “There was a situation where my underlying policy would not pay, nor would the transportation network drop down.”

In 2015, Lehman authored a law requiring Uber, Lyft and other transportation networks to fill that gap as well as offer coverage to the driver while they’ve marked themselves available for work on an app, but are not actively on their way to pick up a delivery or passenger. But that only applied to transporting people, not delivering products.

This year, he authored a similar law, HEA 1125, extending protections to gig workers delivering food and such for companies like DoorDash or Instacart. That may mean Indiana may force companies like GrubHub to greatly expand their offerings in the state.

Indiana Restaurant & Lodging Association CEO Patrick Tamm testified in support of the legislation.

“This does level the playing field to some degree from insurance,” he said. “But it also helps Hoosiers in terms of making sure folks have coverage during that time period while they’re engaged in these types of deliveries.”

If a driver’s insurance policy includes coverage for this gig work, they can choose to use that – but the law prohibits the delivery or transport network from requiring the driver’s personal insurer to deny a claim before letting the network’s insurance kicks in.

The law also sets minimum coverage amounts for the insurance provided to drivers during the various stages of gig work: $50,000 per incident of property damage while marked available and $1,000,000 while making the delivery or en route to begin work.

The new law goes into effect in 2024.

Adam is our labor and employment reporter. Contact him at [email protected] or follow him on Twitter at @arayesIPB.