Running a delivery service means constantly moving—picking up orders, navigating traffic, and racing against the clock to get packages to their destination. But here's what most delivery business owners don't realize until it's too late: your personal auto insurance won't cover you when you're delivering for profit. In fact, using your vehicle for business purposes without the right coverage could get your claim denied and your policy canceled entirely.
Whether you're launching a local courier company, managing a fleet of food delivery drivers, or working as an independent contractor for platforms like DoorDash or Uber Eats, you need specialized insurance coverage. The good news? Understanding delivery service insurance doesn't have to be complicated. Let's break down exactly what coverage you need, what it costs, and how to protect your business without overpaying.
Why Your Personal Auto Policy Won't Cut It
This is the mistake that costs delivery drivers thousands: assuming their personal car insurance covers them while working. It doesn't. Most personal auto policies explicitly exclude coverage for business use, which means if you get into an accident while delivering a package, your insurance company can deny your claim entirely. Worse, they might cancel your policy for violating the terms.
In states like California and New York, commercial auto insurance is actually required by law for all delivery drivers—even if you only work part-time. The law doesn't care whether you're making five deliveries a week or fifty. If you're getting paid to transport goods, you need commercial coverage. Every state except New Hampshire requires auto liability insurance, and using your vehicle for business purposes means you need a commercial policy or at minimum, a rideshare/delivery endorsement added to your personal policy.
Essential Coverage Types for Delivery Businesses
Here's what a properly insured delivery business needs. Think of these as layers of protection—each one covers different risks you'll face on the job.
Commercial Auto Insurance
If the vehicle is titled to your business, you must carry commercial auto insurance to comply with state laws. There's no way around this one. The cost varies based on your driving record, location, and the types of deliveries you make, but it's the price of doing business legally.
General Liability Insurance
General liability protects you from third-party bodily injury and property damage claims that don't involve your vehicle. Say you're delivering food and accidentally drop a hot coffee on a customer, burning them. Or you're wheeling a dolly of packages into an office building and scratch up the expensive marble floors. General liability covers these scenarios—the medical bills, repair costs, and legal fees if you get sued.
Most general liability policies start at $1 million per occurrence, and this coverage is essential for any delivery business that interacts directly with customers or enters their property. For delivery couriers who make deliveries by foot or bicycle, general liability becomes even more important since commercial auto coverage won't apply.
Workers' Compensation Insurance
If you have employees, workers' compensation is legally required in most states. This coverage pays for medical bills and lost wages when employees get hurt on the job—whether that's a car accident during a delivery run, a slip and fall while loading packages, or a repetitive strain injury from constant driving.
For small delivery businesses, workers' comp averages $35-$75 per month, depending on your payroll and claims history. It's a separate policy from your BOP, but it's not optional. Operating without workers' comp when it's required can result in massive fines and personal liability if an employee gets injured.
Hired and Non-Owned Auto Insurance (HNOA)
This is the coverage that protects you when employees use their personal vehicles for deliveries. HNOA provides liability protection for your business if your driver causes an accident in their own car while working. Without this coverage, you could be personally liable for damages that exceed your employee's personal auto policy limits—and remember, their personal policy probably excludes business use anyway.
Common scenarios include employees driving their personal vehicles to make food deliveries, drop off bank deposits, or run business errands. Recent developments in 2025 have made HNOA coverage more accessible, with programs now offering up to $1.5 million in limits and flexible driver eligibility requirements.
The BOP Advantage for Small Delivery Operations
If you're running a small delivery business, a Business Owner's Policy (BOP) is probably your best value. A BOP bundles general liability insurance with commercial property coverage in one package, and it's designed specifically for small businesses. In 2025, the average BOP costs between $57 and $147 per month—significantly less than buying these coverages separately.
The property coverage portion protects your business equipment and inventory. Think GPS devices, phones, delivery bags, uniforms, and any packages you're storing before delivery. If your warehouse gets broken into or a fire damages your equipment, the BOP pays to replace it. The general liability portion handles those third-party injury and damage claims we discussed earlier.
Important note: a BOP doesn't include workers' compensation or commercial auto insurance. You'll need to purchase those separately. But bundling general liability and property coverage in a BOP saves money compared to buying standalone policies for each.
Special Considerations for Gig Economy Drivers
If you're driving for DoorDash, Uber Eats, Instacart, or similar platforms, the insurance situation gets trickier. These platforms offer varying levels of coverage, but almost none of them cover you comprehensively. DoorDash and Uber Eats provide limited coverage during active deliveries—meaning from the moment you pick up the food until you drop it off. But what about when you're waiting for orders? Or driving to the pickup location? You're not covered by the platform.
Even worse, platforms like GrubHub, Instacart, and Shipt offer no auto coverage whatsoever to their drivers. All couriers must have their own car insurance with a policy option that covers them while making deliveries. Your personal policy almost certainly doesn't include this coverage, which means you need to either add a rideshare/delivery endorsement to your personal policy or purchase a commercial policy.
The good news: rideshare endorsements are relatively affordable, typically costing $100-$300 per year or $6-$30 per month. This small investment protects you during all phases of delivery work—not just when you have an active order. It's the difference between having coverage gaps and being fully protected.
What This Actually Costs
Let's put some real numbers on this. For a small delivery business with 1-3 employees, you're looking at approximately $57-$147 per month for a BOP, another $35-$75 per month for workers' compensation, and commercial auto costs that vary widely based on your vehicles, drivers, and location. Many small operations end up paying $200-$400 per month for comprehensive coverage once all policies are factored in.
Your actual costs depend on several factors: your location, the number of drivers you have, your claims history, the types of deliveries you make, your coverage limits, and your deductibles. A food delivery service will have different rates than a courier hauling medical supplies. A business with a clean claims history pays less than one with multiple accidents on record.
How to Get Started
Don't wait until after an accident to figure out your coverage. Start by determining whether you need commercial auto insurance or if a rideshare endorsement is sufficient. If you own vehicles titled to your business or operate in states like California or New York, commercial auto is required. If you're an independent contractor using your personal vehicle, start with a rideshare/delivery endorsement and consider upgrading to a commercial policy as your business grows.
Next, talk to an insurance agent who specializes in commercial coverage. They can help you determine whether a BOP makes sense for your operation and ensure you're meeting all state requirements for workers' compensation. Get quotes from multiple insurers—rates can vary significantly between companies, and bundling policies with one insurer often unlocks discounts.
The bottom line: delivery service insurance isn't optional, and pretending your personal auto policy covers you is a gamble you can't afford to take. Whether you're launching a new courier business or driving part-time for a gig platform, get the right coverage in place before you hit the road. Your business—and your financial future—depend on it.
