Food Delivery Apps Pose New Risks for the Restaurant Industry

Matt Evans, CISR, CLCS, CRIS
The food service industry is changing with the emergence of third-party food delivery apps in recent years. More and more people are opting to stay in and order food from a delivery app rather than driving to the restaurant. Restaurants are partnering with companies like Postmates, UberEats and Door Dash in hopes of capturing the growing demand for convenience and additional sales. So what’s the problem?

The problem is that restaurant owners could potentially be taking on unanticipated liability by the partnership. While the reputable food delivery services require copies of their drivers’ personal auto policies, limit requirements can vary from service to service. Furthermore, certain personal auto policies exclude using personal vehicles for business purposes, or more specifically, delivery driving. Now you have a situation where a third party is delivering food for your business, with potentially low limits and/or a possible business use exclusion on their policy.

Imagine now that driver hits and kills a pedestrian while making a delivery from your restaurant. Someone will have to pay for the damages, but who? The most common phrase in insurance is, “it depends.” It will depend on the language of the agreement between you (the restaurant owner) and the delivery service.

If you are a restaurant owner and use a third-party delivery service it is imperative that you have the contractual language reviewed by your insurance broker in order to understand how the third-party companies’ insurance will respond in the event of a claim.