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Instacart Shoppers Takes Huge Risk Without Commercial Insurance

Instacart Shoppers Takes Huge Risk Without Commercial Insurance

Typically, when independent contractors work for a service like Uber, Lyft, Postmates and Amazon Flex, drivers are covered by their commercial insurance. Commercial insurance is necessary because we are using our cars for business and drivers’ personal insurance coverage will not apply. For Uber and Lyft, it is absolutely necessary since commercial insurance for transporting passenger (livery insurance) is very expensive. Uber and Lyft provide commercial insurance for drivers when they are online for their service. The level of insurance varies whether you are online without a passenger or online with a passenger.

There are some personal auto insurance policies that cover rideshare drivers, but often the coverage ends as soon as you go online with Lyft or Uber. These auto insurance companies won’t drop your coverage once they find out you are a rideshare driver, but they won’t cover when you are online with Lyft or Uber since that is when their commercial insurance will provide coverage.

For delivery services such as Postmates, Doordash and Amazon Flex, it is still very important that they provide their drivers with commercial insurance since most drivers are doing these services with just personal auto insurance. Typically, the above mentioned service will cover drivers if they get into an accident while they are online and available for Postmates, Doordash and Amazon Flex.

Amazon Flex provides very good commercial insurance coverage and have heard good reports from Amazon Flex driver claims. You can read more about Amazon Flex commercial insurance in the below post:

Instacart Shoppers are Taking a Huge Risk

Worker’s Compensation (for your injury):

Typically, on-demand companies such as Lyft, Uber, Postmates, Amazon and Instacart don’t provide worker’s compensation when the shopper itself is injured on the job. Some states require self-employed workers to get this insurance themselves and you often see professional trade services (contractors, plumbers, electricians, roofers, etc) are licensed and insured. That means that they cover their own insurance, both liability and worker’s compensation. This is often a state requirement, but nothing requires on-demand workers to get worker’s compensation.

Worker’s compensation covers workers injury costs when they are injured on the job. For example, if you slip and fall on ice while delivering for Instacart, you are liable to pay for all the cost incurred with the injury, not Instacart. This is pretty much a standard in the industry and you may want to be aware of this gap of coverage. Because Instacart Shoppers spend more time outside the car and are required to lift heavy things at times, Instacart shoppers are at much higher risk to injury to themselves, such as shopping and delivering Costco orders.

The only thing Instacart covers is liability of your injury or actions at various supermarkets. Say you get injured at Costco. Instacart will pay for any liability to Costco, but won’t pay any of your injury claims. I knocked over a whole display of cans on some wooden crates. The weak link was some piece of wood on the bottom supporting the entire stack of cans and when I touched the wood with my cart, it broke and let loose a sea of cans. Luckily, none broke and the cleanup was easy but tedious. If another shopper was actually injured (she wasn’t hurt, but it did pour down on her), Instacart would cover that liability.

Commercial Insurance Coverage (for your car)

After reviewing the Instacart documents, I found that Instacart does not provide commercial auto insurance for its drivers. When Instacart shoppers are paid to deliver goods, their personal auto insurance will not cover them if they get into an accident while delivering. All Instacart shoppers or any on-demand delivery drivers need would be just regular commercial insurance, similar to what you see on other delivery vehicles. The cost of the insurance isn’t that different, but it will go up by $20-$75 a month, which isn’t trivial for delivery drivers who only work part time.

The benefit of commercial insurance is that you can now park in those commercial loading zones without any fear. This benefits only delivery drivers who drive inside a busy city or those who mainly drive within a city during daytime hours. I find that there are many more parking spaces weekday nights and weekend days. If you work full time during daytime hours, you find that you can now legally park in commercial zones a few times a day. If your commercial plates help you avoid a parking ticket a month, this will offset the cost of commercial insurance.

The big downside is that you now need to register your vehicle as a commercial vehicle, which requires different paperwork and additional signage on your car. It may also affect the ability to use the same vehicle for Lyft or Uber. I believe both services now allow commercial vehicles but they require you to remove your business signage off the vehicles.

What are your Options?

One option is to consider a different service. Instacart and Caviar don’t provide commercial insurance, but Postmates, Doordash, and Amazon Flex provides commercial insurance coverage. I personally have worked much less for Instacart and worked more on Amazon Flex and Lyft and Uber because of the commercial insurance issue. I do make slightly more with Instacart but the risk isn’t worth it for me to continue to work that much for Instacart.

Another option is to get commercial insurance or find a personal auto insurance company to cover you to drive while delivering for Instacart or other business uses. I heard from a few shoppers who either have commercial insurance or got a personal auto policy that covers business use. It will depend on the insurance company in your state.

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