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May 6, 2016

Favor Delivery: How Many Reckless Drivers Driving Without Insurance?

By EconMatters

No Parking Sign Means NO Parking
One of my friends in Houston Texas recently had a run-in with a driver of a company called NeighborFavor Inc. d/b/a Favor Delivery.  

It was actually a fairly minor fender bender type of auto incident where a Favor Delivery driver (or runner as Favor calls them) parked at a Fire Lane No Parking Zone directly behind my friend’s garage for a quick drop-off on the job.  My friend then backed into the Favor Driver’s car. 

Driving without Insurance Is a Serious Matter

My friend complained to favor’s corporate office about its driver’s illegal parking causing the accident, and also filed a claim with the runner’s personal auto insurance co.  The initial communications by Favor seemed to think the driver’s insurance co. should cover this claim.  Then the driver’s insurance company noted an “exclusion paragraph” that the personal policy does not cover “liability arising out of operation of a vehicle while it is being used for a fee” which includes delivery for profit.

This means that Favor driver was driving illegally without proper insurance while on the job!   

My friend immediately communicated this “exclusion” and how the driver was actually working for Favor without proper insurance, and if Favor has a corporate policy to cover its drivers on the job.  The subsequent communication from Favor simply denies any wrong doing, yet did not answer the very important question regarding its driver insurance coverage. 

Who Is Favor Delivery?

Based on Google search and emails between my friend and Favor, I understand Favor Delivery is one of those start-ups catering to the Millennial or Gen Y lifestyle of having everything delivered.  Favor’s business model is very similar to Uber that anyone can apply and become a runner making extra bucks delivering for Favor.  Favor Delivery has no company fleet, and each runner makes delivery on the job using their personal vehicle without any company sign or logo.  
Is Favor Delivery a Responsible Corporate Citizen?  

The first question that comes to mind:  How can any legitimate company say it with a straight face that its driver was not at fault parking at a Fire Lane No Parking Zone and driving without insurance? Is this an appropriate manner in which a responsible corporate enterprise which is community facing should behave?      

The second question:  Since Favor did not respond to the question regarding a corporate policy, does that mean Favor does not have a corporate insurance policy covering its runners?  From there, I can only imagine Favor’s operating model most likely is to rely on each runner’s own personal policy to cover vehicle accident liability on the job so to save on a more expensive corporate policy.  (Is Uber also operating under this kind of business model?) 
A Huge Liability Issue for Uber-like Delivery Business

This means there could be a whole lot of pseudo delivery drivers operating in the United States with a gap in their insurance coverage, i.e., they may think their employees have proper insurance coverage, when in fact these drivers are not covered at all for operating in their role as an employee for these Delivery Companies (For a Business) as opposed to covering normal driving activities of a personal nature. Once you cross the line of going “professional”, insurers have clauses to exclude their liability - so how many delivery drivers are actually insured?

This sets up a huge liability for the Uber-like delivery business, i.e., if fatality is involved while delivering and they are found negligible and have no insurance, the trial lawyers are going to have a field day with these delivery firms.

Uber has already failed pretty poorly in the courts so far. I think ultimately these delivery companies that are springing up almost daily have underestimated the standard business practices and costs associated with running a fully insured, corporate enterprise and most likely could go bankrupt or litigated into bankruptcy from a liability standpoint.

Breaking Two Laws and No Fault?

Regardless who was at fault in this particular incident, one thing clear is that this Favor driver broke at least two laws - a Texas law requiring every driver to have at least liability insurance and failure to observe the Fire Lane No Parking sign.  It also shows Favor’s lack or disregard of proper safe driving training for its drivers.         

Reckless Favor Delivery in a City near You?

According to its web site, Favor Delivery is currently operating in 22 cities in the U.S.  From what I’ve seen based on my friend’s experience, Favor is operating a reckless nuisance business in communities all over the United States (and in Toronto, Canada).  I wonder just how many reckless Favor Delivery drivers are driving around your subdivisions without proper insurance coverage.        
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Item Reviewed: Favor Delivery: How Many Reckless Drivers Driving Without Insurance? Rating: 5 Reviewed By: EconMatters