In our increasingly convenience-driven world, food delivery apps like Uber Eats, Grubhub, and DoorDash have become an essential part of life for many. The apps are easy to use and convenient for customers, and they offer flexibility for drivers to create their own hours and achieve a balance between work and the other commitments in their lives.

“In March 2024, observed sales for major meal delivery services grew 8% year-over-year, collectively,” according to Bloomberg Second Measure data analytics.¹ Some analysts estimate that more than 50% of the U.S. workforce “will participate in the gig economy” in the next five years.²

As the gig economy expands, an alarming trend is emerging: the rise in automobile accidents involving gig drivers.³ This uptick in accidents will likely lead to a rise in insurance claims, as delivery drivers and the food delivery app companies they work for face escalating costs and legal challenges.

Food delivery app companies require their drivers to carry their own Auto insurance. However, these companies have secondary insurance policies that may come into play when a driver’s primary insurance is exhausted. As a result, food delivery app companies are increasingly targeted in legal claims due to their deep pockets and perceived liability.⁴

Lawsuits

Plaintiff attorneys argue that the business model of food delivery app services exacerbates safety issues. Drivers are incentivized to complete deliveries quickly to maximize their earnings.⁵ This pressure can lead to dangerous driving behaviors, including speeding, running red lights, and distracted driving, particularly as drivers use their mobile phones to navigate and manage orders.⁶

On November 21, 2023, a wrongful death lawsuit was filed in the Superior Court of Arizona, Maricopa County, against Grubhub. The suit, brought by the family of an Arizona judge killed by a Grubhub driver, alleges that the driver was using his phone to locate the delivery address when he missed a red light and struck the judge, a pedestrian crossing with the right of way. The plaintiffs argue that Grubhub’s business model, which necessitates mobile phone use for order completion, creates dangerous driving scenarios. The lawsuit cites several causes of action against Grubhub, including Negligence, Negligent Hiring/Retention/Supervision/Training, Products Liability, and Punitive Damages.⁷

With the increase in gig economy-related claims filed, insurance companies can expect to see an increase in these claims under various policies, including General Liability, Excess, and Auto policies.

What can insurance companies do?

As food delivery apps gain in popularity, insurers can play a role in addressing safety concerns and reducing accident rates.

• Insurers are, and should continue, encouraging food delivery app and other gig economy companies to introduce telematics programs to improve driver safety.⁸ These programs track driving behaviors and provide feedback, such as real-time alerts. Companies that engage telematics programs have seen an improvement in driving behavior among their riskiest drivers, which makes a big difference in their overall risk profile. It’s important to keep in mind, however, that any use of telematics should consider applicable privacy laws and ensure that use is compliant.⁹
• Insurers can encourage gig companies to reduce risk with reward programs. Cambridge Mobile Telematics data concludes that reward programs are successful at reducing risky behaviors, which in turn reduces the risk of accidents: “For a gig economy company with 300,000 drivers, this could prevent up to 750 crashes. And, with the average liability property damage claim averaging $5,300 recently, this could mean saving over $4 million in claims costs alone.”¹⁰

If you have questions or would like to learn more about this topic, please reach out to me or your Gen Re claims executive. We look forward to hearing from you.