The Delivery Run the Personal Auto Policy Never Saw
Marcus drives for a food-delivery app about 20 hours a week in his own car, insured on a personal auto policy with 100/300/50 liability, a $1,000 collision deductible, a $500 other-than-collision deductible, UM/UIM of 100/300, and MedPay of $3,000. While on a delivery run he looks down to check the app and strikes a cyclist, who suffers $200,000 in injuries. The app's commercial policy covers drivers while they are logged into the app; its liability limit is $1,000,000. Four days later, driving to the grocery store, an uninsured driver runs a stop sign, totals Marcus's car ($14,000 actual cash value) and injures his back ($30,000 in medical bills and lost wages).
1. Which policy responds to the cyclist, and does Marcus's personal auto policy defend him?
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The personal auto policy does not respond to the delivery-run claim.
- The PAP excludes use of a covered auto to carry persons or property for a fee. Food delivery on a gig platform is squarely within that exclusion - it is not a shared-expense carpool and not a livery exception.
- Because the exclusion removes the auto from "covered auto" status for that use, the PAP owes neither defense nor indemnity for the cyclist's claim. The adjuster's denial should cite the delivery exclusion specifically, not a generic "business use" label.
- The app's commercial policy is the responding policy: $1,000,000 limit, and it applies only while Marcus is logged in and on an active delivery. The timing evidence matters - the app's trip log and GPS will establish whether he was on a run at the moment of impact.
- Gap analysis: if the cyclist's damages exceed $1,000,000, or if the app carrier disputes that Marcus was logged in, Marcus is personally exposed with no personal liability coverage behind him. His 100/300/50 limits are irrelevant to this loss because that policy has been excluded, not exhausted.
- Underwriting lesson: delivery and rideshare use requires either a commercial auto policy or a rideshare endorsement that buys back the exclusion. Telling the carrier after the loss is too late; misrepresenting the vehicle's use on the application also gives the carrier a material misrepresentation defense on the whole policy.
2. On the grocery trip, what does Marcus's personal auto policy pay, and where do the coverages overlap?
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This trip is ordinary personal use, so the PAP applies in full against the uninsured driver.
| Coverage | Amount | Reasoning |
|---|---|---|
| UM bodily injury | $30,000 | Uninsured driver at fault; injury and lost wages within the $100,000 per-person UM limit |
| MedPay | up to $3,000 | Reasonable medical expenses regardless of fault |
| Collision | $13,000 | $14,000 ACV minus the $1,000 collision deductible |
Judgment points:
- UM and MedPay overlap must be checked, not assumed. Many California UM endorsements contain a reducing clause that offsets UM payments by amounts paid under MedPay or medical payments. If the clause is present, the $3,000 MedPay reduces the UM payment rather than adding to it, and Marcus's total is $30,000, not $33,000. State the assumption and read the endorsement.
- UM is not liability insurance. It pays what the uninsured driver was legally liable for, measured by Marcus's damages, capped by the UM limits. It is not a no-fault benefit and it does not pay for the car - collision does that.
- Subrogation: the insurer pays collision and then pursues the uninsured driver. Recovery prospects are poor, and this is the reason carriers price UM and collision the way they do. Marcus's deductible is returned only if the carrier recovers.
- Nothing here cures the delivery exposure from the earlier loss - the two events are separate and are handled under different policies.
3. Marcus says 100/300/50 is far above the state minimum, so he is "fully covered." Evaluate that claim and recommend changes.
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The minimum is a compliance floor, not an adequacy measure.
- California's financial responsibility minimums for private passenger auto policies issued or renewed on or after January 1, 2025 are 30/60/15. Marcus's 100/300/50 comfortably exceeds them, so he satisfies the law and avoids a license suspension problem - but that is the only thing it proves.
- Against the cyclist, his $100,000 per-person limit is half of the $200,000 injury. Even without the delivery exclusion, he would personally owe roughly $100,000. With the exclusion, the personal policy pays nothing and the app's carrier decides whether and how much it pays.
- Compounding factors he has not priced: 20 hours a week of delivery driving multiplies exposure miles; a 20-year-old vehicle with a $14,000 ACV means collision is the only meaningful physical damage protection; no umbrella means every dollar above a limit is a personal asset claim.
Recommendations, in priority order:
- Obtain proper commercial auto or a rideshare/delivery endorsement that buys back the fee-for-service exclusion - this is the fatal flaw in the program, not the limit.
- Raise liability to at least 250/500 and add a $1,000,000 personal umbrella, which is usually cheap relative to the exposure it removes.
- Keep UM/UIM at the same limits as the liability coverage; uninsured and underinsured drivers are the most likely claim source he will face.
- Disclose the delivery activity to the current carrier now. Continued non-disclosure converts a coverage gap into a potential rescission defense on the entire policy.