Insurance Needs?

My partner and I are starting an independent, carry out/delivery pizzeria. We’ll probably only have about 5 people on the payroll at first. For delivery, the drivers will use their own vehicles. With that said, I wanted to find out what all kind of insurance we’ll need before we go talk to our insurance guy. Basically, we don’t want him to tell us What all policies he thinks we need without knowing ourselves what is necessary.

Any advice is appreciated!


Law requires: Work Comp, Unemployment.
Landlord and lender will require: General business/property liability.
ommon sense requires: Certainly Hired and Non-Owned vehicle coverage. Possibly employment practices.

I suspect the one you are asking about is Hired and Non-owned Auto. Here is why YOU need it:

  1. Your driver’s coverage (even if they have it paid current and in force which they often do not) may be invalid for pizza delivery use and not pay WHEN there is a claim. If your drivers ask, many insurance companies will tell them the use is excluded.

  2. Your drivers coverage DOES NOT PROTECT YOU from liability. If there is ever a lawsuit you can count on being named both as a business and personally.

This coverage is not cheap. Depending on expected sales the coverage will probably cost you $4-6K per year.

business income coverage
umbrella liability
agree with the hired, non-owned vehicle liability
If in a high crime area, that coverage could be valuable

Ask about costs of Replacement value instead of Depriciated Value on property/physical losses

I sent you far too much information and the names of some coverages out there. You will likely be steered to a package product to save money. . . I may be wrong about BOP in my message to you as restaurants may not be eligible, though fast food is.

If you are in a snowy winter location, be sure you are covered for weight of snow/ice if you own the building.

I have a stupid question but is there such a thing as a “non-hired, non owned”. Say for someone you dont hire on payroll like a contractor who just only delivers for you and dont actual work in the store?, becuase I have a guy who wants to just do deliveries, I know for a fact that LC in an area south of me has a couple kids that do just that

I think non owned and non hired would be the same…

I appreciate the input guys. I just hated to go talk to an agent without knowing anything about it. We’re good now though!

Thing is, if he isn’t an employee, not a hired car, you have to demonstrate where you see your insurable interest. Contractors are generally required to insure themselves to indemnify their contractees.

There is a double handful of different commercial auto coverages; so it might be worth discussing it with your agent/company to see if one fits your situation.

“Hired” refers to the car not the person. As in leased or rented. It makes no difference whether the the person driving it is an employee or not. What you are insuring is your potential liability for something that occurs when an order from your business is being fullfilled or some other business purpose of yours is being met.

The coverage does not protect the driver or the vehicle, only your interests.

Be careful with the idea of calling drivers contractors. Talk to your attorney and accountant about it. In most cases it will not fly.

I know for a fact that LC in the city next to me has drivers listed only as contract, all they do is sit in the lobby & deliver pizzas and thats it, & they get pd $5/hr plus they get to keep tips, I know a couple of people who work there also I know managers of other locations and they call them contract ?? beats me??

Just because they do it does not make it legal. Check with your own attorney and accountant before calling scheduled workers contractors. You can get really hung out to dry on work comp if one of them gets hurt (think car accident) and sues and the contractor status is disallowed. It is possible that they could be ruled to be an employee and the Work Comp insurance not cover the incident since they were not declared and paid for and the expenses may fall on YOU.

If a business writes the work schedule, sets the pay rate, provides hot bags etc it is very likely they would lose this arguement when it comes to work comp, unemployment and employers share of fica etc.

Back on topic, having hired and non-owned protects you and the business from a lawsuit resulting from a car accident. It does not matter who is at fault or who does or does not have current insurance on the car they use for delivery or whether they are an employee or a contractor. Anyone can be named in a suit and your general business liability coverage will exclude this area. If you are not covered, it could cost you 20-50K to fight and WIN. Costs of losing can be far worse.

When I was an insurance adjuster, the biggest cost in most liability claims was investigation and defense costs…Very few claims ever made it to settlement and/or court…But I saw a lot of small businesses “wiped out” because the did not carry the correct liability coverages and when faced with a lawsuit (with or without merit) they incurred incredible expenses to defend themselves…

yeah I agree with you guys, thats why I asked the question, Im meeting with my insurance guy next week, just wanted to throw out the question, becuase I have had a few guys wanting to do just deliveries. Will inform when I find out info and the legalities for our state

Here’s the IRS’ 20-factor test for if a person is an employee or an independent contractor: http://www.uschambersmallbusinessnation … e/P07_1115

I can’t imagine any pizza operation that could legally classify their drivers as independent contractors. I fail 17 of the 20 looking at them strictly, and probably all 20 if you loosely define them.

Excellent link Piper!