Business Insurance: Are You Covered for Food Delivery Risk?

Posted by Noff Colabella on Tue, Jul 25, 2017 @ 03:57 PM

business-insuranceIn today’s busy world, food delivery is a booming business. This convenience comes at a cost, however. When businesses offer delivery service, they open the door to new risks. Before you expand your services to include home delivery, make sure your business insurance adequately protects against the risks below.

Car Accidents

Car accidents are a huge liability exposure. Being in a hurry may add to the risk. For example, prior to 1993, Domino’s Pizza guaranteed a speedy delivery. If the pizza didn’t arrive in 30 minutes, it was free. After an accident and expensive lawsuit – the Los Angeles Times reports the jury ordered an award of $79 million – Domino’s abandoned the guarantee.

Unfortunately, this was not the end of the end of crash-related lawsuits. In 2013, a jury found Domino’s negligent in another crash. Consumerist reports that bald tires were to blame this time, and the award was set at $32 million – although the Examiner reports that this ruling was overturned in 2015. In 2016, a jury in yet another case set an award of $10 million in a wrongful-death suit against Domino’s, according to the Orlando Sentinel.  

Any company offering delivery services must be ready for car accidents.  Even if employees drive their own cars, your company can be found at fault. Make sure you have insurance for all driver/vehicle scenarios.

Robbery, Fraud and Pranks  

Because delivery drivers go to unknown addresses as part of their job, they are especially vulnerable to crime. Robberies are common. In addition to the initial loss, companies may face workers’ compensation claims and other liability issues stemming from robberies and associated injuries. When payments are made online, fraud and even pranks – placing fake orders to mess with people – can also be issues. 

Food Safety

Foodborne illnesses are another major concern. To keep food safe, it’s important to maintain the correct temperature. According to the United States Department of Agriculture, storing food at temperatures between 40 and 140 degrees Fahrenheit can lead to dangerous levels of bacteria. In just 20 minutes, the bacteria levels can double.

Even if a delivery is expected to take less than 20 minutes, there are many variables. A traffic jam could increase the time food spends in transit, so it’s important to maintain safe temperatures throughout the delivery process.

Third-Party Delivery

Instead of hiring their own delivery drivers, many restaurants are turning to third-party delivery companies. UberEATS, Grubhub and DoorDash are among the companies offering such services. Although working with a third-party deliveryfood-delivery-risk service may transfer some of the associated risks, restaurants should not assume that they are completely free from liability. If a foodborne illness is discovered, it may be difficult to prove whether the blame belongs to the food delivery service or the restaurant.

The Takeaway

Many businesses may find that they need to offer delivery services to satisfy their customers and stay competitive. Before doing so, the company needs to assess the risk and take steps to minimize them.

When employing delivery drivers, companies should give those drivers sufficient time, check driving records and ensure that the vehicle is in safe condition. Measures should be taken to protect the drivers and the company against crime, as well. Food must be stored at safe temperatures, and if third-party delivery services are used, liability issues and disclaimers should be made clear. Finally, companies should check their insurance policies to see whether the risks associated with delivery are covered.

Tags: food delivery risk, Food safety