While traditional employees are almost always covered by their company’s liability policies for on-the-job mistakes or accidents, independent contractors are not. When contracting with a transportation provider to provide service that includes supply the means of transportation (vehicle), drivers are usually considered independent contractors. 

Many of these delivery service or ride share drivers do not realize that they are now in business for themselves and have taken on some level of risk. They all need to be asking themselves: “What am I liable for?”

The answer is – a lot. Consider the following real-life scenarios:

Scenario I: As a ride share driver, I was involved in a serious crash where it was not clear at the scene which vehicle was responsible. The passenger in my vehicle and I were seriously injured. Unfortunately, I didn’t have the additional $1M optional driver coverage, and my personal vehicle insurance wouldn’t cover damages because it has a business exclusion. What can I do? Can the ride share company help me?  

Scenario II: As a last mile delivery driver, I delivered a package that unbeknownst to me, had damage to its contents - or so the customer said. When the customer tried to return the item, the shipper confirmed it left their warehouse intact. Who is responsible?  

Scenario III: Almost all independent transportation providers are required to comply with a criminal background check that may result in some exclusions for specific criminal activity. Passengers are not screened by anyone and are only flagged after an incident occurs. Today, I picked up a man who beat me to the point that I needed medical attention. Will the company cover my expenses as the ride share driver?  

Drivers do not often think that these scenarios can occur when they sign up with ride sharing or last mile delivery companies. Additionally, contractual responsibility is buried in a contract that contains a large amount of legal speak. The courts are only beginning to parse out who is responsible for what part of losses in some larger cases and situations where many contractors are having similar issues. 

Start thinking about your liability

Millions of packages are delivered by last mile services every day and more than two million passengers daily use a ride sharing service. Odds are that situations where something goes wrong such as the scenarios above happen more often than you would think, and the financial repercussions can be very serious for a driver using his/her vehicle to earn a living or for a new business person that has contracted on a couple of vehicles to get a start in the transportation business.

Business insurance considerations 

  1. Inquire if the fleet offers insurance policies for independent contractors such as physical damage, business liability and occupational accident coverages.

  2. Review any agreements or contracts carefully. It is a good idea to have an attorney or your insurance agent review the documents to identify the level of risk that is being taken on.

  3. Be aware of the risks associated with passengers and different types of packages. Use good judgement when picking up a passenger, particularly if they are acting strange or request to go to an isolated area. When delivering items out of the norm, drivers and their vehicles must be capable of the special handling requests.   

Personal insurance considerations 

  1. Understand the limits of your personal auto and health insurance policies. It is important to make sure that coverage exists in the case of a crash while using your vehicle for business, and that medical expenses will be covered if you are injured while working. 

  2. Inquire as to the company’s liability limits and policies if you were to be involved in an accident or injured while working under contract for them.

  3. If transporting items for last mile delivery, understand what your liability is when there is a claim for damaged product. Additionally, do not transport packages that have any sort of damage or have been tampered with unless there is some sort of liability waiver in place.

Contact your HUB broker and risk services specialist to make sure you’re covered for all types of risk when it comes to independent contractor liability.