Today, the “on-demand” industry is easily one of the fastest growing markets out there. With the appearance of this industry, providers require on-demand car insurance solutions. U.S. consumers are already spending $57.6 billion in the on-demand economy and according to PwC research, it is estimated to reach an impressive $335 billion by 2025.
A part of the success of DaaS companies is–somewhat obviously–linked to the ever-increasing rise of the sharing and gig economies. If a consumer is in need of a burger, cold medicine, dish soap or even a handle of vodka–there’s someone out there who can get it to their door, quick.
Popular DaaS companies like Uber, TaskRabbit, and Drizly seem to barely be able to keep up with the high consumer demand–always looking to hire and expand their reach. The same can be said for smaller on-demand companies too. But on top of those everyday concerns around growing a DaaS business, comes a plethora of challenges for just getting started in the first place. And one of those start up hurdles is obtaining proper on-demand car insurance coverage.
It’s a business that carries a good deal of risk along with it, so having on-demand car insurance is a must. Here’s where to start:
1. Know What Insurance Type You Need
When operating an on-demand business, there are many auto-related risks that exist. So carrying a commercial auto insurance policy is a given. However under that umbrella exists two other types of insurance: delivery driver insurance and rideshare insurance. Each insurance type covers different things.
Be sure to clearly explain your type of DaaS business to your insurance broker so that they can get you set up properly. Further, you’ll want to ensure your coverage options include features like high policy limits, affordable premiums, and easy purchase options.
2. Have Realistic Projections In Mind
You’ll have to have an idea about the overall “scope” of your business in order for your insurance broker to finalize your policy. By this we mean that you should be prepared to answer questions like, “What is the number of miles that will be driven by your drivers?” You’ll also want to keep in mind a solid number of trips and the total estimated revenue for the policy period.
3. Do Your Due Diligence
When running an on-demand business, there can be a lot of ambiguity around your employees and their backgrounds. To make obtaining on-demand car insurance a bit easier, conduct preliminary driver screenings to validate them as responsible drivers and delivery people before starting the whole on-demand car insurance process.
You’ll want to collect Motor Vehicle Records, do thorough background checks, and collect their personal auto insurance policies. This will give you a bit of a jumpstart and show your broker that you have put the necessary time in to vet your driving staff to the best of your ability.
Obtaining an on-demand car insurance policy that will cover all of your needs is one of the best things you can do to set your company up for success. You may find that many insurance companies are intimidated by an on-demand business, and don’t think that the opportunities outweigh the risks. Embroker is not that kind of insurance agency. When others turn you down, we’re here to find a way to yes.
Check out our digital insurance platform to find a policy that works for you and always feel free to reach out to our brokers for any questions or help along the way.