Business and Operations
Marketing Insights: Insuring a good delivery
Insuring a good delivery
By Michelle Brisebois
Having a pizza delivered is a well-established
tradition. In today’s time-starved culture, receiving your dinner at
your front door definitely has appeal.
Having a pizza delivered is a well-established tradition. In today’s time-starved culture, receiving your dinner at your front door definitely has appeal.
Offering a solid delivery service does pose some challenges and potential pitfalls. For many operators, the hassle just doesn’t seem worth it. However, armed with the proper information, conducting an effective, safe delivery service is certainly viable. It’s simply a matter of asking the right questions of yourself, your insurer and your employees.
Canadian Pizza Magazine canvassed some insurance professionals to get their thoughts on how an operator could obtain the proper coverage for a delivery program. Here is their advice:
To Own Or Not To Own
Operators will want to think about whether or not they wish to have a company-owned fleet of delivery cars. If this is your preferred structure, make sure you’re clear about what these vehicles are worth – their market value. If you’re not worried about the physical vehicle should there be an accident, theft or breakage – it may be an option to forgo collision or comprehensive insurance to keep costs down. If the number of vehicles is more than five, it’s considered a fleet for insurance purposes and therefore a different pricing structure comes into play.
Focus On Liability Coverage
It’s very important if you’re obtaining auto insurance for delivery vehicles through the regular market (the same market where you obtain your business insurance), to get adequate liability coverage. Our experts recommend a minimum of two million dollars in liability coverage. This is very important should there be an accident with injuries possibly resulting in major claims.
Know Whom You’re Hiring
If you’re hiring staff to perform delivery services, you’ll want to clarify what sort of impact they’ll have on your insurance premiums. Drivers under the age of 25 will cost more to insure.
Make this due diligence part of your recruiting process. Ask viable candidates to provide an up-to-date copy of their motor vehicle record. This will reveal any licence suspensions or tickets. It will also show the date of the incident and the date of conviction (if it is a more serious charge) or payment of the ticket. An employee with a spotty driving record could end up costing you more to insure.
Get Express Permission
Ask candidates in writing for express permission to obtain an “Auto Plus” report. This will reveal any insurance claims going back several years.
The report can help the insurance company interpret fault or non-fault related to any claims. This will be important to know if you’re going to put this person in a delivery position. The information on the Auto Plus report can impact your insurance rates as well as giving you an indication of the potential risk this person brings to the position. More than two minor tickets (based on conviction date) may mean this driver would not qualify under a regular market policy.
Keep Your Insurer Informed
Let your insurance company know who’s driving your company vehicles. Everybody you hire comes with history and some of it may end up costing you big time. Drivers under the age of 25 command higher premiums as a rule.
If they use their own car…
If you choose to let the employees use their own vehicles for delivery purposes, you’ll need a tight procedure for this as well. Once you establish what you’ll pay them for gas and wear and tear on their vehicle, you’ll need to do some homework.
First, confirm in writing from the candidate’s insurance company that their vehicle is insured for delivery purposes. Secondly, confirm the vehicle is insured for delivery in the specific geographical area you need serviced. You will then need to secure “non-owned” auto liability insurance.
If there is an accident involving a “non-owned” vehicle, it is very possible that you – the operator – could be dragged into a law suit. If the employee hasn’t told their insurance company their vehicle is being used for delivery purposes and it comes out in the investigation – the operator may get caught in the crossfire. The driver’s insurance won’t cover the operator so you’ll need to protect yourself.
Do Your Homework
Get several quotes from different brokers (close to your base of business) predicated on the same assumptions.
Sometimes very attractive rates can be obtained through a professional association plan. If non-owned auto insurance becomes a problem, ask your broker to get a facility association quote for you.
There is strength in numbers and competitive rates can be offered when similar businesses band together. This may be a great venue for other types of business insurance too.
Make Safety A Cultural Tenet
A Hamilton pizza delivery driver had an accident while trying to delivery a pizza in under 30 minutes. It seems this company’s policy was to offer the pizza free to the consumer if it took more than 30 minutes. If the pizza was late, the driver had to pay for the free pizza.
In April 2001, a woman crossing a downtown street when the driver came speeding through the intersection as he rushed to meet his deadline. She was “knocked down” and “left in a pool of blood on the street.” According to court records, to this day she claims to have migraine headaches, back pain, swollen feet, memory loss and “sadness.” Her claim was for $6 million. The plaintiff’s lawyer pleaded that the policy was “a material contribution to the driver’s negligence because it rewarded speed and penalized tardiness by requiring the driver to pay for the pizza if he didn’t meet the deadline.”
The judge’s ruling supported this argument. It seems silly for a company to risk lives, its reputation and a large legal bill for a few dollars worth of pizza ingredients. It’s essentially stepping over quarters to pick up nickels.
Have a corporate directive that states “do not speed” and ensure your employees know safety trumps jumping through hoops. If an employee has a chronic problem with late deliveries – make it a human resource issue to address.
Delivery may very well be a positive service to offer. It’s a valuable service that people will probably be willing to pay a premium for and it offers an easy way to shop for dinner. Don’t be scared off by dramatic headlines. Just look at the opportunity and find a great insurance partner to help you mitigate the risk. •