How To Set Up Car Insurance for DoorDash - Tips & Tricks

DoorDash does not have any special requirements regarding your car insurance policy. Towards the end of the Dasher sign-up process, you are prompted to check a box confirming possession of your state’s minimum personal auto insurance - so if you’re on the road legally with your state, you are good to be a Dasher as far as DoorDash is concerned.

However, It is important to note that whileDoorDash does not have any special requirements, your insurance company will likely treat accidents while you are Dashing differently than accidents you are in on your own personal time. The majority of personal auto insurance plans do not cover accidents sustained while working. 

To get around this complication, DoorDash drivers who find themselves in an accident will often attempt to claim that they were not Dashing at the time of the accident. This tactic is illegal - it is insurance fraud. But it is a common way that Dashers try to deal with this problem. 

Instead of committing insurance fraud, adding rideshare insurance ($10-30/month) to your main policy is a minimal expense for making sure you have complete coverage in the event of an accident. This is often the optimal method of protecting yourself while driving DoorDash. 

Understanding the limitations of your personal auto insurance policy

Many insurance companies include what is known as a livery exclusion in personal auto insurance policies. If you have a livery exclusion in your insurance contract, you will not have coverage during business use “delivering goods or people.” This stipulation is not specific to DoorDash; it extends to all gig economy drivers. This includes driving for companies like UberEats, Grubhub, Instacart, Shipt, and more.

Why it’s risky to ignore getting the right insurance for Dashing

If you never get into an accident or try to file a car insurance claim, you should have no problems for your entire DoorDash career. Even if you get pulled over, you should present your standard state-mandated personal insurance policy, and you should be let on your way; you’ve done nothing wrong.

However, if you find yourself in an accident where you need to contact your insurance company - perhaps it is to pay for your own car repairs, your own medical bills, or the car/medical expenses of the person you hit - you will need to tread carefully.

Some Dashers report that when they found themselves in this situation, they proceeded to commit insurance fraud (and often got away with it). They might do things like:

• Hide DoorDash paraphernalia (like your hot bag) as soon as the accident happens, so the police never put it in the police report that eventually makes its way to your insurance company
• Lie to the insurance adjuster that discusses the accident with you, claiming things like “no, I was not earning income at the time of my accident” and “I was driving on a personal errand XYZ when I got into the accident”
• Figure out ways to obscure their phone records (in the event that the accident was serious enough to warrant a deeper investigation), hiding the fact that the DoorDash app was active at the time

Again, lying to your insurance company like this in order to facilitate a fraudulent payout is illegal and could come with civil or criminal penalties, depending on your state. 

So what does DoorDash’s own insurance offer its Dashers?

DoorDash does provide basic liability protection as secondary coverage for accidents involving Dashers who are actively on a Dash. This means that, in the event that your personal auto insurance policy denies your claim because you were Dashing at the time of your accident, DoorDash’s policy would step in to cover the other person’s medical and vehicle repair expenses.

This could help you cover the other person’s repair and medical expenses (up to $1,000,000) - but not your own repairs or medical expenses.

Note that as long as you are on a Dash, whether you are driving to the restaurant to pick up an order, or driving to the customer to drop off an order, you would be covered in the same way. Ryan Shaw, a Dasher with over 3 years of experience, explains, “If you are driving to the restaurant, you've already accepted the order, meaning you are in the "delivery service" period and eligible for coverage assuming two conditions are met: you are liable for damages or injuries to another party AND your primary insurance denied the claim.”

How to find yourself the best car insurance for DoorDash

Put simply: the best car insurance for DoorDash drivers is simply the addition of Business Use Coverage to your existing personal auto insurance. Get it by calling your agent, tell them you are going to occasionally drive for DoorDash, and ask how to get covered. They may refer you to something called “rideshare coverage” or “business use coverage,” and it shouldn’t cost more than $10-30/month or so.

For example, if you are with USAA, you can ask for their USAA Rideshare Business Use Coverage. If you are with State Farm, ask for their own Rideshare Business Use Coverage. Other providers likely have other equivalents - just talk with your agent.

Don’t bother getting Commercial Coverage

Some blogs may advise you to consider buying a whole new Commercial Coverage policy. If you are a typical Dasher, this is overkill - you do not need a whole new standalone commercial insurance policy for your personal vehicle. Commercial insurance is for companies who do things like buy business-use-only vehicles, have many employees drive those vehicles, or do exceptionally dangerous things with those vehicles (like drive 18-wheelers long distances, or haul construction equipment around).

Can I write off car insurance for DoorDash?

Yes, driving for DoorDash makes (part of) your car insurance payment a deductible expense.

When filing your taxes, you will subtract all your deductible business expenses from your business revenue (e.g. how much you earned from DoorDash) - and you will get taxed a percentage of that final amount.

The IRS gives you two options for calculating your deductible expenses:

• Actual Expense Method: This method involves keeping track of all your car-related expenses and deducting them on your tax return. This would include gas, repairs, insurance, and depreciation or lease payments.
• Standard Mileage Rate Method: The IRS also provides a standard mileage rate that you can use to calculate your deduction. As of 2024, this rate is 67 cents per mile. If you choose this method, you would multiply the total number of miles driven for business purposes (in this case, your DoorDash deliveries) by the standard mileage rate to calculate your deduction. You must choose this method in the first year you use your car for business, and then in subsequent years, you can choose either method.

Importantly: note that you can only deduct the portion of your car insurance payment that was for “business use”. That makes the “Actual Expense” method quite complicated: you would need to track what percentage of the time you were using your car for personal use vs. business use, and calculate your deductible expense (for your car insurance payment) as some percentage.

Choosing the “Standard Mileage Rate” method, on the other hand, makes things simple: you just keep track of the miles you drive. But choosing the “Standard Mileage Rate” method means that it doesn’t matter how much you’re paying for your insurance - you get your tax benefit based solely on the number of miles you drive for DoorDash.

So if you choose the “Standard Mileage Rate” method - the answer to “is car insurance a deductible expense for DoorDashers” may as well be “no.” You won’t get any extra tax benefit by paying more for your insurance.

Many Dashers use apps like Everlance or Driversnote to automatically track your mileage, income, and expenses. The data is organized and presented efficiently to protect Dashers hard earned profits by deducting expenses. The apps are not free, but many Dashers consider them well worth the subscription cost.

Does DoorDash notify my insurance that I am a Dasher?

No, DoorDash does not notify your insurance company. As discussed above, DoorDash does not have any special requirements about what kind of insurance you need, nor do they ask you for your specific insurance information - they have no way to inform your insurance company that you are a Dasher.

As a result, your insurance premiums will not change as a result of starting to work for DoorDash. They will only change if you yourself contact your insurance agent and set yourself up with business use coverage (which we recommend you do!) for something like $10-30/month.

Get started with being a Dasher

Whether or not you have your car insurance lined up, you can start your application to be a Dasher now. It can take a few days to get through the process, so you can get started while you wait to have that phone call with your insurance agent.

Did you find all this information about car insurance overwhelming? Consider renting a car for DoorDash, or doing DoorDash on a bike, instead.