Risky Business
Are you a Courier or an Expediter?
The number of people dabbling in Amazon Last Mile Delivery has thrown a bit of a wrench in the insurance underwriting of smaller vehicles making “for hire” deliveries.
A professional cargo van or sprinter driver hauling time sensitive freight on an unlimited radius is a clear cut “Expediter Classification” for most insurance companies.
But what about Couriers? Most personal auto policies don’t accept vehicles “carrying persons or property for compensation or a fee.”
Progressive is one of the largest providers of Commercial Auto Insurance, and with that a very strong niche in the Expediting Market Place.
Last week all Agents received new underwriting clarifications from Progressive regarding Couriers vs Expediters.
In a nutshell…
Couriers
Document & Package Delivery UP to 50 Mile Radius ONLY in vehicles UP TO 9,000 GVW
Expediters
Anything hauled for Hire OVER 50 Mile Radius regardless of vehicle GVW
I give Progressive a lot of credit for keeping their underwriting so simple here.
As many in our Expediting Community already know, the gaming of classification by true Expediters to Courier in order to reduce premium has been going on for a while now. (Note the new 9,000 GVW)
One reason this change is so important to professional drivers like you is that these new guidelines help equalize the overhead for the correctly classified Expediter competing against someone without the same insurance.
It also allows underwriting to determine an accurate cost of insurance for true Couriers based on their actual loss ratio. (This will be interesting to watch as more and more people enter the Gig Economy…which includes folks making deliveries out of their cars:)
Why were the Expediter premiums more expensive than Courier in so many cases?
Expediters are on the road 24/7 and weeks at a time.
Couriers simply don’t have that same road time exposure to risk.
So while Couriers certainly cause accidents, they tend to be fender benders and not the large costly collisions that result in bodily injury on highways which impact the expediter loss ratio. That could certainly change with the increase of drivers for Amazon, Wal-mart, Google and Uber.
Audits
The next question will be “Who is enforcing the accuracy?” Well, Progressive has stated in their new guidelines that they are in the process of auditing all “Courier” Policies and will reclassify and rerate those that should have been “Expediting – Trucking for Hire”. This is for both new and existing policies, and I think we can assume this auditing will also apply in a claims scenario.
So is Progressive the end all in defining Couriers vs Expediters? No, of course not.
Progressive doesn’t represent all Independent Contractor policies in this niche, but they are the leader in the marketplace. Because they are so large, when they update any new guidelines many other insurance companies quietly follow suit.
Bottom line, as more and more Independent Contractors in smaller units decide how they want to operate their delivery or trucking for hire operations, it’s simply smart to have the inside scoop to avoid surprises!
Shelly Benisch, TRS, CIC
Commercial Insurance Solutions Inc. (CIS)
