Why a review of your insurance coverages and risk controls needs to be on the menu
As restaurants navigate the new reality of the Coronavirus (COVID-19), many are considering alternative business models to comply with government mandated closures of on-premises dining. In order to continue serving customers, keep employees working, and perpetuate a revenue stream, some restaurants are offering carry-out and delivery services. The introduction or expansion of delivery services should be done only after confirming workers’ compensation coverage and commercial hired and non-owned auto liability will apply to the delivery drivers’ utilizing their own vehicles, and implementing loss control measures.
Even though there are risks involved with delivery services (i.e., health exposures, workers’ compensation and non-owned auto vehicles), there may be an opportunity for the restaurant to continue serving customers, keep employees working and perpetuate a revenue stream during this rapid evolution and unprecedented times by offering delivery services.
Transfer of the Virus & Delivery
Since food would still be prepared and handled, every business within the hospitality industry should have a contract in place with cleaning and disinfecting vendors in order to minimize COVID-19 exposure to both employees and the general public. In addition, the following Centers for Disease Control and Prevention (CDC) safety protocols should be followed for all delivery services:
- Actively encourage sick delivery drivers to stay home.
- Mandate the use of face masks/coverings for all drivers and other employees.
- Encourage the use of (and assist in obtaining) hand sanitizer, disposable wipes and other cleaning products so that frequently touched surfaces can be wiped down by drivers.
- Implement the avoidance of close contact with individuals as much as possible.
- This includes developing policies and technology options that allow and prioritize contactless deliveries (e.g., no-knock, no-signature, all electronic credit card transactions, etc.) that limit or eliminate close contact between delivery drivers and suppliers and purchasers.
Liability Issues to Be Aware Of:
Driver-sales jobs, including delivery workers, are consistently ranked in the top 10 most dangerous occupations by the U.S. Bureau of Labor Statistics. Individuals who drive while on the job are at a higher risk to be in a motor vehicle accident. Only a limited number of commercial insurance carriers will accept the risk after full underwriting and loss control. Most personal automobile policies exclude coverage for the use of a vehicle being used to carry persons or property for compensation or fee, including retail or wholesale delivery of food or any other product, making this a commercial non-owned auto liability coverage exposure for the restaurant. This is often referred to as the “pizza delivery exclusion”.
Non-Owned Auto Liability – Generally, if an employee is in a motor vehicle accident in their owned vehicle while on the job, the employee’s personal auto insurance will first respond to and pay for damages. After the limits of liability on the employee’s personal auto policy are exhausted, the injured third-party may look to the restaurant to pay damages. However, if the employee is in a motor vehicle accident in their owned vehicle while on the job delivering food, the restaurant’s non-owned auto liability policy will most likely respond primary because most personal automobile policies exclude coverage while a vehicle is being used to deliver food or any other product for compensation.
Workers’ Compensation – Delivery workers have an increased risk to injury for multiple reasons. Statistically, individuals who drive while on the job are at a higher risk to be injured or killed in a motor vehicle accident. The uncontrolled environment associated with delivering goods makes delivery workers at greater risk of slips, trips and falls. There is also a risk of injury due to robbery of goods or money. Any time an employee is injured on company time, the claim will be included in the experience modification calculation and will negatively impact claims history, increasing premiums.
Controlling the Risk:
Even though a restaurant’s only option may be to have non-owned auto coverage, instead of operating their own fleet, there are ways to control the risks involved.
- Personal auto use should be restricted where possible. Employers should have a written program in place detailing their driver policies and procedures. Policies should require employees follow all laws, require the use of seat belts, restrict the use of communication devices in all but emergency situations and prohibit the use of alcohol and both legal or illegal drugs that may impair their ability to drive safely.
- Drivers should be qualified as if they are operating company owned vehicles. This qualification process should include:
- Confirming the employee holds a valid driver’s license
- The employee’s motor vehicle report, or MVR, should be accessed annually. The MVR should then be compared against company set driving criteria. Any employee not meeting this criteria should not be allowed to drive.
- Ensuring proper driver training and document that each driver has been trained on company policy in regards to distracted driving. Training should be used to address both auto and worker’s compensation risks.
- Employees using a personal vehicle for business use should be asked to provide proof of insurance and confirmation that there are no exclusions regarding business use. The employer should retain on file a current copy of the employee’s declarations page for their personal auto insurance policy. Instead of accepting state minimum limits, many companies and commercial auto carriers require higher limits be maintained on employee personal auto policies to further reduce their exposure. Transferring more of the risk by requiring higher limits is a very useful practice that should be strongly considered.
- A non-owned “Auto Use Agreement” similar to what’s shown below should be implemented to document expectations of drivers of non-owned vehicles and to document that these drivers are aware of what’s expected of them.
As more restaurants depend on delivery services to keep their operations running during this unprecedented time, it’s vital to understand these delivery service exposures and how you can protect your restaurant from these risks. Stay safe and we will get through this rapid evolution together.
For the latest information, guidance and resources on COVID-19 to help you protect what matters most, please visit www.hubinternational.com/coronavirus.