Author: Chris Boggs
Pizza delivery is not new. Its history goes further back than you think. In fact, the first recoded request for pizza delivery occurred in 1889 – and it was by royalty. While in Naples, King Umberto I of Italy and Queen Margherita of Savoy made the first call. History doesn't record if it was delivered in 30 minutes or less.
Obviously, this first delivery wasn't by car, so the personal auto policy exposure wasn't a consideration. But in the modern world, approximately 2 million pizzas are delivered every day on average. If every delivery driver makes 30 deliveries per night, that equates to approximately 91,000 pizza delivery drivers on the road on any given evening.
This doesn't include any other food delivery drivers such as Chinese food delivery. Nor do these numbers consider the newish food delivery app drivers such as those driving for GrubHub, DoorDash, UberEats and others. If all forms and sources of food delivery are included, there may be well over 100,000 food delivery drivers on the road every night.
For the personal auto insurance industry, food delivery is a big exposure. And because so many teenagers and even young adults deliver food as a primary or secondary source of income, agents are regularly asked if the PAP covers food delivery.
Does the PAP extend coverage for food delivery? Well, maybe! Like so many other insurance coverage questions, the answer depends on the coverage language of the individual policy and the specifics of the activity.
Before answering this question, one key fact must be understood – we are not addressing coverage for individuals delivering for any of the app-based food delivery operations (GrubHub, DoorDash, Uber Eats, etc.). This article focuses solely on whether personal auto coverage extends to individuals employed by and delivering for a single establishment (i.e. the 18 -year-old working for the local Dominos).
PAP Exclusions of Interest
Whether Insurance Services Office's (ISO's) PAP provides liability coverage for food delivery is a function of two exclusions: the business use exclusion and/or the public or livery conveyance exclusion.
Business Use Exclusion: The business use exclusion is a non-factor in this discussion. The PAP excludes the use of an auto when being used in an auto-related business (sales, service, repair, etc.), unless the car is owned by the named insured, a family member or others provided the car is listed on the PAP. So, this exclusion can be ignored when discussing food delivery.
Public or Livery Conveyance Exclusions: This exclusion may have more teeth. The applicable part of this exclusion reads:
EXCLUSIONS
A. We do not provide Liability Coverage for any "insured":
5. For that "insured's" liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.
Does an employee delivering food qualify as either public or livery conveyance? If it does, the PAP provides no coverage.
Although generally phrased as one concept, public conveyance and livery conveyance are actually two different threshold requirements (notice the “or" between the terms). Let's define both terms to clarify coverage (or the lack thereof).
- Public conveyance: Making the vehicle available for public use (like a common carrier);
- Livery conveyance: Carrying persons or property for a fee.
Is food delivery “public conveyance"? No, the vehicle is not available for public use; it is being used by the employee on behalf of his/her employer only, and only for a single purpose – food delivery. Making the vehicle available for public use is what the ride sharing apps and food delivery apps do (thus, there is NO coverage for drivers delivering for GrubHub, etc.). When delivering for a single restaurant, the vehicle is not available to others – thus this wording does not exclude coverage.
However, does food delivery trigger the “livery conveyance" exclusion? The employee is carrying property (namely food), but is the cost of the food considered a fee? And considering fees, does charging a separate delivery “fee" make a difference?
Courts seem to agree that an employee delivering food for his/her employer is not livery conveyance even if a separate delivery fee is charged. In a livery conveyance, the fee is charged by the carrier as their remuneration for providing the service. In pizza delivery or food delivery, the fee is charged by the employer for its own purposes (probably a charge for convenience) and is not necessarily for the benefit of the driver.
Remember, the public or livery conveyance is intended to exclude coverage for those who are in a common-carrier-like business, not the person using their personal auto to delivering property for their employer.
This discussion is a long way around to answering the question of coverage in ISO's PAP. Yes, the ISO personal auto policy provides coverage for food delivery. But this doesn't mean carriers won't try to utilize the public or livery conveyance exclusion if the injury is bad enough.
Not All Policies are Created Equal
ISO's personal auto policy has been the focus to this point; but not every insured is extended coverage from policies utilizing ISO language. Some carriers apply proprietary PAP language; this is why agents must read and compare the policies they are selling – not only to each other but to ISO.
One policy reviewed contained this food delivery liability exclusion:
Any insured using any vehicle while employed in the pickup or delivery of newspapers or magazines, food or any products for the purpose of compensation. This exclusion does not apply to delivery that is incidental to an insured's business.
Another addressed food delivery this way:
Coverage under this Part I, including our duty to defend, will not apply to any insured person for:
1. bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle or trailer while being used:
b. for retail or wholesale delivery, including, but not limited to, the pickup, transport or delivery of magazines, newspapers, mail or food;
Unless the agent reviews and compares policy wording, the fact that food delivery is excluded in one policy but not another could create an unanticipated coverage gap that may be costly for the insured – and ultimately the agent.
Does the PAP Extend Coverage for Delivery?
Back to the original question, does the PAP extend coverage for food delivery? It depends.
It depends on the employment relationship. Does the driver work for an employer (the 18-year-old working for the local pizza place); or are they delivering for an “app-based" delivery service (GrubHub, DoorDash, Uber Eats, etc.).
Coverage depends on the policy language.
- If the driver is an “app-based" driver, the answer is easy, there is no coverage extended from the unendorsed PAP. (Although not the subject of this article, ISO does not currently offer endorsements specific to app-based food delivery – so this exclusion cannot be altered. ISO promulgated two “ride sharing" endorsements, but there are no food delivery endorsements.)
- If the driver works for a single employer delivering that restaurant's food, whether or not coverage exists is a function of the PAP. If ISO or similar wording applies, coverage is extended for food delivery. However, non-ISO wording found in proprietary forms may specifically exclude coverage.
Form language is key.
Final Word
Assumptions are always dangerous, but they are especially dangerous when insurance contracts are involved. Assuming that any policy is the same as any other policy is not only dangerous, it's reckless. Such an assumption puts the insured in jeopardy and opens the agent to an errors and omissions claim.
Read and compare policy forms! Explain the differences to the insured and allow them to make the decision. But never, under any circumstances, assume that there are no coverage differences between or among policies.
Remember, although premium is a factor, insureds buy insurance to have coverage at the time of a claim. Ultimately, insurance is about coverage, not premium.
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