By Lorie Lewis Ham
Due to the pandemic, many people are out of work and getting creative about earning money. One popular choice is to become a driver for one of the food delivery businesses, like Doordash, Instacart, Uber Eats, and Grubhub. However, have you thought about what using your car for business might mean for your auto insurance?
Let’s say you are out delivering groceries for Instacart and you get into an accident. There is damage to your car and the person in the other car is hurt—will your insurance cover all of this? Would you be surprised if the delivery company denies any responsibility?
Delivery Side Gig
“The contract you sign to become a driver for these companies says that you are an independent contractor and not their employee,” shares Jerry Linscheid, General Manager for Mennonite Aid Plan/Mennonite Insurance Services. (This may be changing in CA in the future) Because of that, no payroll taxes will be withheld, and there won’t be any worker’s compensation or liability (auto or general) insurance provided.
However, you may be thinking, I have insurance. Your car is insured and your homeowner or renters policy includes liability coverage. “Those policies are designed for personal use, not business exposure,” continues Jerry. “Many personal policies exclude coverage for business exposure. Using your car for Instacart deliveries is a business exposure. Don’t rely on personal insurance for business.”
Or perhaps you have decided to become a part of the Airbnb craze. Let’s say you are renting out your home while you are gone on business trips, or “hosting” as they call it. You have a nice home with a great kitchen but the family staying there leaves the dinner they are cooking on your stove unattended and a fire starts. They catch it in time to avoid calling the fire department. But there is significant damage to the ceiling and walls in your kitchen. Will your homeowner’s policy cover that?
According to Jerry, the guests caused the damage and should be responsible for the repairs. The contract with Airbnb says that Airbnb is not responsible for anything other than connecting the host and the guest and collecting money. There are, however, some insurance coverages available through Airbnb, both for damage to the host’s property and injury to guests.
AirBnB Side Gig
“Let’s say that for some reason, neither the guests nor Airbnb will pay for the repairs, and you have to file a claim on your homeowner policy,” states Jerry. “All homeowner policies cover loss due to fire. While the business use of your home might be a problem for liability coverage, it likely will not prevent coverage for the damage to your kitchen.”
Yard Work Side Gig
What if your son decides to use your brand-new lawnmower to make some extra money during the summer? Your elderly neighbor hires him to mow his extremely neglected back yard, but because the grass is so tall. Your son accidentally runs over a spigot in the yard and it needs to be replaced. Will your insurance cover this? Will your neighbor’s insurance cover this? Or will your son have to pay for it out of his summer earnings?
First off, Jerry asks, “On what planet is it okay to take your father’s brand-new lawnmower and mistreat it? Was the mower damaged?” Back to insurance. According to Jerry, the neighbor’s policy might cover the damage, subject to the deductible on his policy. $500-$1,000 is a normal deductible. But it seems unlikely that a broken pipe and spigot would cost close to that amount, including labor.
“Your homeowner liability coverage usually doesn’t have a deductible. There are often allowances for business activities that are occasional, typically performed by minors, or earn less than $2,000/ year. You should check your policy for what business activity is allowed.”
So how do you avoid all of these situations? The important thing is to find all of this out BEFORE you start working as a gig driver, Airbnb host, or let your child become a teenage entrepreneur. Contact Mennonite Insurance and they would be happy to help! 559-638-2327.