Few underwriters are willing to touch the food delivery business. But Program Risk Specialists now offers monoline non-owned and hired auto liability coverage to businesses with drivers as young as 18.
PRODUCT: Monoline non-owned and hired auto liability coverage
COMPANY: Program Risk Specialists
BEST RATING: A+-rated paper (Superior)
AVAILABILITY: Coverage is available through independent agents and brokers.
FOCUS: Under a now-defunct “your pizza delivered in 30 minutes or it’s free” ad campaign, a Domino’s pizza delivery driver ran a red light and seriously injured someone, who won a $78 million judgment. Since then, few underwriters have been willing to touch the food delivery business.
Thank the “moral hazard.”
“Getting a pizza from point A to point B before it gets cold and you lose your tip creates pressure on the driver that may induce him or her to drive in a way that’s not safe,” says John Ware, lead underwriter at Program Risk Specialists. The company takes on the risk and offers cover—monoline non-owned and hired auto liability coverage—to businesses with drivers as young as 18.
This insurance is necessary for restaurants—fast food, mom-and-pop, chains—where employees drive their own or restaurant-rented vehicles to deliver food. “Actuarially, it’s one of the most hazardous risks to insure,” Ware says.
The product also works for companies like GrubHub that pick up food orders from restaurants that don’t deliver and take the food to the customer’s door. In addition, it works for couriers of groceries, alcohol, tobacco, legal documents, prescriptions and more.
Delivery operations like GrubHub are a huge trend, Ware says. To meet their insurance needs, “we maintain an underwriting philosophy to strive for progressiveness towards writing emerging risks and to be comfortable with ‘uncomfortable,’” he says. “Most GL markets cover a receptionist driving her car to get the mail, someone who’s doing some incidental driving. Our specialty is Symbol 8 [hired autos] and 9 [non-owned autos]. It’s all we do. We can help agents and brokers with the knowledge gap inherent in this situation.”
Ware emphasizes that Program Risk Specialists is not a market for rideshare risks like Uber or Lyft, nor for public livery or trucking.
UNDERWRITING: Capacity is $2 million combined single limit. $2 million in unsupported excess is also available—one or the other. The minimum attachment point over a commercial lead policy is $100,000. To receive a pricing recommendation, applicants must complete a supplemental application on the website and provide five years’ currently valued loss runs. For risks using independent contractors, Program Risk Specialists also requires a copy of their driver agreement.
MINIMUM PREMIUM: $2,500 for primary; $1,500 for excess.
TARGET: Both independent and franchise restaurants that deliver food, as well as couriers with bespoke and difficult-to-place risks. Ineligible classes include public livery or rideshare, such as Uber or Lyft, and trucking with a radius beyond 100 miles or hazmat/combustible material hauling.
COVERAGE TERRITORY: Non-admitted in all U.S. states.
CONTACT: John Ware, lead underwriter; Program Risk Specialists, 3025 Windward Plaza, Suite 400, Alpharetta, GA 30005; 770-396-1600, ext. 133.
Ronimarie Acord is an IA contributor.
