There are 3 main reasons we see for why people decide to purchase insurance for their delivery business:

1) To grow their business,

2) To cut their costs, and

3) To manage their risk

Let’s examine each of these and see if they apply to you.

Growth

Your customers attach strings to the volume they send your way. Service level arrangements, pricing agreements, and data sharing orchestration are all part and parcel of the hoops you need to jump through to maintain and grow your business. Whether we think they make sense or not, if the price is right there is no hoop a shipper won’t jump through to win volume.

As delivery companies grow and expand, they often encounter a new customer stipulation attached to new business: insurance mandates. Just like how smaller delivery companies are less likely to carry certain forms of coverage, so too are smaller customers less likely to be concerned with certain types of risk.

But often larger, more savvy shippers are aware of the legal liability that can flow back upstream, flooding their business in red ink. In general and on average, the larger the client the higher the insurance and compliance standards they are likely to stipulate.

So maybe you’ve just had a talk with a potential client and realized you’ll need to scramble to get up to speed on your insurance status. Or maybe there’s no immediate need, but you have an inkling that to take your business to the next level you’ll need to tackle the leviathan that is insurance.

Either way, we recommend you follow the 3 step checklist in Getting Started as your next step.

Speed kills. And so do first impressions. That’s why it’s better to do your insurance homework before the need arises. Make sure you’re armed with the knowledge and expertise you need to close new business when the opportunity comes.

So seriously, if this is you, go to Getting Started and get cracking.

Lower Costs

It’s no secret that delivery companies have been getting gutted by rising prices. For the last 10+ years, insurance rates across the spectrum have been steadily ticking upwards. A rising tide lifts all boats, but in our industry the rising cost of insurance has been squeezing out less competitive firms and lowering profit margins in general (Why Are Prices Rising?)

There’s not too much to say about this one. If you can get commensurate coverage at a lower price (for you or your drivers), that’s often enough to tip a company to make a switch to a different policy provider. Since there’s always pain associated with making an internal change, the bigger the savings the better.

Once again, if lowering insurance costs is your heart’s desire, we recommend you check out the 3 step checklist in Getting Started as next steps.

And don’t forget, getting and comparing quotes can take time, so you should psychologically prepare yourself for a marathon and not a sprint.

Managing Risk

Separate from using insurance to grow your business or shopping around for lower rates, the third most common reason we see for purchasing insurance is the one you’d think would be most common: to manage risk.

There are 2 main concerns we see business owners bringing to these conversations:

1) Misclassification Risk

2) Accident Liability

While there are some ancillary risks we also see folks liking to take off the table (cargo insurance, for example), the risk of a misclassification lawsuit as well as getting tangled up in a general liability brawl top the list.

And fair enough. Several rulings in recent memory show just how wrong things can go for a business when it loses the misclassification battle, and the steady drum beat of auto accident liability risk day in and day out for a delivery business may be a constant source of anxiety for an owner.

Unlike the first two reasons on our list (growth and cutting costs), this reason rightfully takes on a more personal and subjective nature. Different companies (and different individuals for that matter) bear different risk tolerances. A California company might obsess over misclassification risk, while a Texas carrier might say, “Misclassifi… what now? Let’s grab brisket for lunch”. A business might prefer more robust accident liability coverage at a higher price tag, whereas others might prefer to keep the insurance cupboards more bare in exchange for having a larger bill in the event of rolling snake eyes.

Use your conversations with insurance providers to understand the facts. Ask for their opinion on your current exposure profile. But ultimately only you can make certain decisions. Just like our own personal healthcare options offer different premiums, deductibles, coverages, etc., so too it is with your delivery company.

If you’re worried over the risks certain types of events pose to your business, we recommend you check out the 3 step checklist in Getting Started as next steps.