Wisconsin Requires Coverage for Food Delivery Services - What Does This Mean for the Insurance Industry?
In what could be a sign of a growing trend, last Monday the Wisconsin Office of the Commissioner of Insurance (OCI) issued an order that prohibits insurers from denying a claim solely because the insured was delivering food for a restaurant closed because of coronavirus concerns. In addition, as part of that same order, OCI mandated that carriers notify their restaurant insureds that hired and non-owned auto coverage is available upon request through either a rider or a stand-alone policy.1
Similar efforts are underway in Colorado, Connecticut, Kentucky, Tennessee and Washington as states look for ways to relieve a restaurant sector devastated by the coronavirus pandemic. On March 17, Wisconsin mandated the closure of its bars and restaurants to prevent spread of the COVID-19 virus. As a result, restaurateurs are scrambling to generate revenue. One obvious way is to ramp up “curbside” pickup. Others may take the additional step of providing delivery services.
It is for the “delivery” group that the Wisconsin order seeks to help. The order applies to all policies in effect on or after March 17, 2020, and to all occurrences taking place on or after March 23, 2020. Not subject to the order are Transportation Network Companies such as Uber Eats, delivery drivers who already have coverage, and restaurants not impacted by virtue of previously providing delivery services.
While the order comes in response to an unprecedented pandemic, its practical impact could be relatively small. This is because most Wisconsin restaurants, taverns and supper clubs aren’t delivering food in the current environment. Instead, they’re remaining open only for “curbside” or “carry-out” delivery. Others are also encouraging customers to use third-party delivery services such as Uber Eats.
That leaves a small group of restaurants that may decide to offer food delivery. In those instances, the order requires carriers to provide hired and non-owned auto coverage. Although the order is recent and analysis ongoing, the following can be gleaned:
- Carriers are obligated to notify restaurant insureds that hired and non-owned coverage is available.
- The order provides no timeline under which notification must be made or how it must be completed.
- Carriers should develop and promptly implement a non-discriminatory notification protocol that is sensitive to the public health emergency that COVID-19 represents.
Beyond the above, Personal Auto coverage could be triggered if a policyholder opted to deliver food for a restaurant that had no hired and non-owned coverage. Could we see more of this in the days ahead?
We all hope that the unprecedented disruption caused by the pandemic ends soon. However, early indications suggest it may be some time before daily life returns to normal. Moreover, tightening standards as to physical interaction may make it impractical for restaurants to remain open for even carry-out operations. Some operators have chosen to close completely after finding it impossible to prepare food while maintaining the required six-feet of social distancing.
Under such dire circumstances, no insurance order can even begin to blunt the devastating economic impact of the pandemic.
- Mark V. Afable, Commissioner of Insurance, “Coverage for Delivery Drivers for Restaurants during the COVID-19 Public Health Emergency,” March 23, 2020 Memo.