KAKE NEWS INVESTIGATES: Legal loopholes in insurance rules for delivery apps like GrubHub

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GrubHub, DoorDash, Postmates, UberEats.  

They're national companies making billions of dollars bringing  you food from your favorite restaurants.  But many are letting their drivers pay the price if there's an accident on the way to your home.  KAKE News investigator Pilar Pedraza uncovered how a minor accident revealed a major crack in insurance coverage rules.

"I ordered some ice cream from Burger King," said Teresa Thiessen of Wichita.  

She wanted to get her kids a tasty treat last January.  For convenience she used the GrubHub app to place the order.  But the delivery driver brought more than just ice cream.

"I stayed upstairs," she said, waiting for the driver to arrive.  "And that's when I heard a crash."

Teresa says the driver, running late, pulled into the driveway too fast and hit her car.  They exchanged insurance and Teresa filed a claim.  

"I got a call from All State stating that the driver did take fault in striking the vehicle.  But because she only had personal insurance and not commercial insurance, she did admit she was driving for GrubHub, they wouldn't cover it," Teresa said.

That left her with a $1,500 repair bill.  Her own insurance told her it could cover part of the repairs, but she'd have to take the driver to small claims court to get the rest.

Attorney Sean Brennan specializes in accident recovery cases.  He says situations like this are on the rise.

"Most people have a personal auto policy, don't understand that there is an exclusion in that personal auto policy that excludes coverage for you if you're transporting people for money or if you're transporting food for money." Brennan explained.

When you sign up to be a delivery driver for GrubHub, it talks about the minimum age for drivers and how much driving experience they have to had.  It says you need to have a driver's license and auto insurance.  It doesn't specify which kind of insurance.

State Farm is one of the few insurance companies that have extended coverage with a personal policy.  

Spokesperson Benjamin Palmer told KAKE News, "An endorsement would not be necessary for our policy related to delivery services.  However, there is an exclusion for damage to the property of others, such as the food or goods being transported for delivery."

When All State denied Teresa's claim, she turned to GrubHub, expecting help. In their statement to KAKE news, the company says that their driver is compliant with state insurance laws and that the fender bender wasn't even caused by their driver.

GrubHub statement in full

It’s our priority to bring the best experience to our diners and everyone who comes into contact with our brand. In any situation when the delivery process doesn’t go as planned, we work hard to meticulously investigate.

All delivery partners are required to maintain insurance. After an investigation, we found that in this case the driver was compliant with the state's insurance requirements. We also understand that the driver’s insurance company separately investigated the incident thoroughly and concluded that the driver’s car was not involved in causing the damage to the diner’s car.

A denial never made in All State's letter to Teresa, which said it was denying the claim because: "We have found that our insured policy does not provide coverage for the loss that occurred." 

"When I brought up the fact that her personal insurance did not cover the accident, they said they weren't breaking any laws, that they were doing just what they were told (by Kansas) which is personal insurance only," Teresa said.  "And then they declined to speak any further and just disconnected the call."

"It's irresponsible of a company not to let their employees know that they need insurance," said Janet Ruiz with the Insurance Information Institute.  

The institute tracks insurance trends but does not lobby for the industry.  Ruiz says a big part of the problem is that state laws are not keeping up with changes in technology.  Kansas currently does not have a bill in the works to close this loophole.

"So many of us order food that way," Brennan said.  "The more prevalent it becomes, the more accidents there are going to be."

According to Statista Market Research, the number of people using food delivery apps grew by more than 8 million just in the last two years.

The food delivery companies doing it right? UberEats and Postmates.  Both now providing coverage for all drivers in the case of an accident. 

"I expect that if they are driving for that company that they are following the laws and they have some type of insurance that will cover them while they're delivering the food," Teresa said.

"I think these large companies are saying that's an expense we don't want to bear.  So we're just not going to do it," Brennan said.

A Kansas lawmaker we spoke with told KAKE News Investigates that while there isn't a law being worked on in Kansas right now, they'd consider following in the footsteps of states like California, which has a bill which applies to third party delivery working its way through the legislature, and Nevada, which has already passed a requirement for third party delivery companies to cover their drivers.  If a bill is introduced in Kansas, we'll bring it to you.