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Using your car for gig work could cost you big

A few years ago I thought I’d make some extra cash driving for UBER on my days off. I signed up on their platform, went through their car approval process and got the sticker in the mail. I never actually drove for them, but when I was in a car accident last year I answered “yes” when my insurance company asked if I used my car for ride shares. They promptly canceled my car insurance. It took months to untangle that mess. I learned two things. 1. Insurance companies do not get nuanced answers and 2. You can’t use your vehicle for commercial practices on a regular personal policy.

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With the pandemic in full swing, lots of people are looking for creative ways to supplement their income. You may be using your car to drive for ride shares, shuttle packages for Amazon, shop for groceries or deliver restaurant orders, thinking if you get into an accident your personal car insurance policy or the company you’re working for will cover you. You may be in for a rude awakening.

Gig work is great. It can fill in the financial cracks and keep your head above water but be smart about it. Before you take your first order do the following:

  • Find out if the delivery company or restaurant has insurance that covers you and get a copy of the policy. Know before you drive for them how much, if any, protection they provide drivers in the event of an accident.
  • Contact your auto insurance company to see if your policy covers delivery driving. Some insurance companies are temporarily broadening coverage to include use of your personal vehicles to make deliveries.
  • If your auto insurance policy doesn’t cover business use, consider upgrading to a commercial auto policy.

Whatever you do, don’t drive without proper protection. If you think you’re financially struggling now, you won’t believe how painful being on the hook for the full repair costs can be.

If you need assistance, contact your Henry+Horne tax professional for more details.  For more information and resources on COVID-19, see our coronavirus page.

Beth Hawley