How to Set Up Car Insurance for DoorDash: What You Need to Know
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Your personal auto insurance doesn’t cover you when your vehicle is involved in an accident while delivering for DoorDash. Did you know that?
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When this happens, many DoorDasher driver lie to their insurance company that they were not working when the accident occurred to help them get covered. While most Dashers get away with this, it is illegal and punishable by law.
That is why I have prepared this article to show you how to set up a business auto insurance on top of your personal insurance with insurance companies like State Farm and USAA.
Furthermore, I will explain how DoorDash liability protection works, and how that too can cover you in an unexpected situation when working for the food service company.
So, without further ado, let’s get to it!
Why Your Personal Auto Insurance won’t Protect You when You’re Working?
Insurance companies get that the way you drive for work is usually riskier than your everyday personal trips. That’s why they’re not too keen on throwing coverage your way with a regular personal policy.
Insurance companies achieve this by incorporating a clause known as the “Livery exclusion” in their personal auto insurance policies. This clause is designed to exclude coverage for damages or accidents that occur when using your vehicle for business purposes. Such business activities encompass:
- Making deliveries for DoorDash, Instacart, Shipt, Grubhub, or Amazon Flex.
- Working for Uber and Lyft.
- Renting out your car on Turo, HyreCar, and similar platforms.
This means your insurance will not cover expenses like medical bills and repairs in the event of an accident.
Is there Insurance Provided for DoorDash Drivers?
Yes, DoorDash provides an insurance for dashers. This is a basic liability insurance which is worth up to $1 million. However, this is a secondary insurance to support your main insurance (personal auto insurance).
But in an accident, you only get this insurance if you were actively doing DoorDash. That is, you were on your way to pick up an order at a restaurant or deliver it to a hungry customer.
In an accident, the DoorDash insurance takes care of the other person’s car repairs and any injuries regardless of who caused the accident. Nevertheless, note that if you’re logged into the app but haven’t accepted a delivery yet, the insurance won’t cover you.
How the Insurance Gets Activated
- When you’re actively working (Delivery Service Period).
- When you, the Dasher, is seen as the one responsible for the accident.
- When your primary auto insurance fails to cover you with letter proof from the company.
Why Do You Need DoorDash Insurance Beyond Basic Coverage?
The DoorDash basic liability insurance is good since you’re covered up to $1,000,000 when an accident happens. Nonetheless, the insurance has its shortcomings, and you should know about them:
Firstly, the insurance only covers you when you’re actively working. This means you have accepted an order and are on your way to pick it up or deliver it. If the order was canceled before the accident, you don’t get covered.
Secondly, the insurance does not cover your vehicle damages and injuries but the third party, or the other person who was injured or had their car damaged, even if the accident was caused by the person.
Plus, having a $1 million coverage might seem like a lot, but it might not cut it if you’re dealing with a major accident that racks up hefty bills for property damage or medical expenses.
What Other Types of Insurance Coverages Are Available for DoorDash Drivers?
While you can operate with just your personal insurance policy, it poses a significant risk as you would be responsible for covering damages and medical bills directly from your own pocket.
Now that you are aware of the limitations of DoorDash’s basic liability insurance, consider getting extra coverage to ensure you’re fully protected when unexpected things happen.
- Commercial Coverage
This is one insurance coverage to consider as it protects you if you’re using your vehicle for only business. But I don’t recommend commercial coverage for delivery drivers because it’s very expensive. As a delivery driver, you don’t need any special commercial insurance. This insurance policy is mostly gotten by established companies who use cars for solely business.
- Business Coverage
The business insurance coverage is what you need as a DoorDash driver. This is added to your personal insurance policy and the cool thing is that it doesn’t cost as much as the commercial coverage.
How Can You Include Business Insurance Coverage in Your Plan?
It’s easy—just give your insurance company a call and let them know you’ll be using your vehicle for DoorDash deliveries. Your agent will then include business use or rideshare coverage in your personal insurance plan.
How Much Does Business Coverage Cost?
For business coverage, you can be paying anywhere from $60 to $1,000 annually. But it all depends on your insurance company, location, coverage needs, and other factors.
What Are The Best Insurance Companies for DoorDash Drivers?
Here are the popular insurance companies where you can get your business coverage:
- USAA: You get add-on coverage at a very affordable price. Plus, the coverage you get covers you even when you’re not actively doing DoorDash.
- State Farm: This company gives add-on coverage, which is about 15% to 20% of the premium insurance. However, the coverage varies by location or state.
- GEICO: Business insurance from Geico covers you if an accident occurs, plus you get benefits like emergency roadside service. The insurance is designed to replace your personal auto insurance.
- Allstate: The insurance offered by this company works perfectly for DoorDash drivers and also Uber or Lyft drivers (rideshare workers).
- Progressive: You get an add-on insurance to your personal auto insurance. What’s great about Progressive insurance is that you’re protected not only during DoorDash deliveries but also when you’re logged in or waiting for a trip.
Frequently Asked Questions
What Is The Best Car Insurance For DoorDash Drivers?
There are several best car insurance for DoorDash when you’re considering factors like coverage, cost, company reputation, and availability in your state. So far, the 3 best car insurance are State Farm, USAA, and Allstate.
Do You Need Commercial Insurance For DoorDash?
No, you don’t. Getting a business insurance add-on to your personal auto insurance is enough. Commercial insurance is typically intended for companies that acquire vehicles specifically for business use.
Moreover, considering its higher cost, DoorDash drivers don’t necessarily need commercial insurance because it will drain your wallet.
Can You Write Off Car Insurance While DoorDashing?
Yes, you can write off car insurance. Being a DoorDash driver means you’re an independent contractor, making expenses like car insurance premiums and mileage eligible for tax deductions.
However, it’s important to note that you can’t write off your entire car insurance. Only a portion of the premium can be considered a deductible business expense, and this is subject to specific conditions, including:
- If you use your vehicle mainly for DoorDash delivery, not just personal use.
- You meet the IRS requirements for deducting business expenses like tracking your business expenses such as mileage and repairs uisng apps like Hurdlr and Everlance.
- You decide to list your deductions individually on your tax return instead of choosing the standard deduction.
Final Words
As a DoorDash driver, having additional car insurance is essential alongside your personal auto insurance. Companies like State Farm and Allstate offer business insurance coverage that you can utilize.
While DoorDash’s basic liability insurance provides coverage up to $1 million, it comes with activation conditions and only covers the third party. Therefore, opting for extra coverage, such as business insurance, is the smart move.
I hope this article answered your question. I wish you well with your DoorDash business. Cheers!
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Manuelo is an entrepreneur and a personal finance nerd. He is the founder of Dollars And Freedom. An expert in side hustles, online gigs, and everything about making money. His works have been featured on major financial publications, like Business Insider, GoBankingRates, Investopedia, Entrepreneur, and more. When he’s not busy with his blog or writing for others, you’ll catch him hanging out with loved ones or reading books on stoicism and self-development.
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