GDP Blog

What Insurance Do I Need For A Pizza Delivery Store?

Posted by John Powter

Jan 13, 2014 10:09:59 AM

Pizza_delivery_franchiseOnce you add the delivery of Pizza or any food it changes your insurance picture greatly.  Below I will give you the top 5 mistakes I see that pizza operators make.  But first, here are a few facts.

  • Dominos drivers will log 4 million miles on Super Bowl Sunday
  • 3 billion pizzas are sold in the US
  • Pizza is one of the few food services that, culturally, we expect to be delivered to our door

As a business owner, what are things you need to have in place to make sure you can handle this volume of business and turn a healthy profit?

Top 5 Mistakes

GDP Advisors is one of the top insurance providers for pizza delivery franchises in the US. Our industry experience has helped us understand the common pitfalls facing pizza delivery operations, and now we’re sharing them with you:

  1. Make sure your Hired and Non-owned Automobile Liability (HNOA) policy will drop down if your primary insurance denies the claim, and confirm the amount you are responsible for.
  2. Check the fine print. Is your policy auditable? If so, are you tracking what you reported compared to actual?
  3. If there is a claim, are the costs to adjust that claim included in the premium or is there a separate charge? Many of the policies have an $80/hr charge and claims can take years to adjust.
  4. Many of the leases we review stipulate that the Tenant is responsible for Improvements and Betterments (TIB).  If your insurance policy only covers the equipment in your store, even at proper levels you will be writing a check in the case of a total loss. Here’s a quick example. A new Pizza store equipment package typically costs between $150,000 and $250,000 depending on the volume the store will handle.  However, the TIB can range from $75,000-$150,000. If there is a total loss, the cost to restore everything would be $225,000 at a minimum, which causes a coverage gap of $75,000.
  5. Be proactive in your risk management. Twenty years ago it wasn’t standard procedure to run a motor vehicle report (MVR) on a potential driver. Not doing that today seems insane. There are strategies the top delivery operators are employing today that ensure they have the best quality drivers on the road.  Some of the examples include:
  • Run MVR’s every 6 months
  • Have written MVR guidelines and if there is an employee that is close to meeting the threshold, run that MVR every 3 months
  • Have a preplanned calendar of driver safety topics and meet monthly to discuss issues
  • If there is an incident, make sure you send a manager to the scene and there is a checklist to gather all the information (pictures, witness statements, etc.) needed
  • Perform an annual review of all the risks facing your business and develop a systematic plan to address them before they become an issue. If you feel like you are putting out fires all day long then that should be a sign of being reactive vs. proactive. 

Understanding these mistakes can help you avoid them – and the costs that come along with them – in the first place.

List of Insurance Policies

Because there is consistency in terms of the business model across pizza delivery franchises, it is fairly easy to identify the basic types of insurance they will need. In our experience, every franchisee should hold these five types of insurance policies.

Hired and Non Owned Auto

The typical business model for pizza delivery franchises is to have the drivers use their own car. It’s less expensive than going out and buying a fleet of vehicles, but if you choose this model, how do you insure something you don’t own but have a liability for?  It’s called Hired and Non Owned Auto - or HNOA - and comes in above your drivers’ own personal insurance. Let’s use a quick example.

Driver has (insert any insurance company name) for the liability and physical damage of the vehicle. While delivering a pizza, they get into an accident by rear ending another vehicle. Depending upon which state you live in, there are minimum limits you are required to carry. For example, lets say it’s $20,000. If the driver causes $100,000 in medical bills or property damage, what happens? The HNOA policy comes in excess of the $20,000 and, in this case, would pay $80,000 only for the liability the driver caused.  The damage to their personal vehicle would be covered under their own policy.


Many times, coverage for Property, General Liability and Crime are bunched together in a Package Policy or BOP. I will break down each one, as sometimes they are split out.  Just like your homeowners insurance, if the store were to catch on fire, be hit by a tornado, or a car driving through it (believe it or not, it’s happened multiple times), you would need the capital to replace the equipment, complete the repairs and cover the lost profit and keep key employees. Your property insurance policy will pay for the risks described above if the policy is structured properly with adequate limits and coverages.

General Liability

This covers damage to a third party, such as if someone slips and falls in your restaurant. It also covers if one of your drivers backs into a garage door or runs over a mailbox. It doesn’t cover your employees if they are injured or purposely assault a customer (yes, that has happened too).

Workers Compensation

This policy protects you if one of your employees is injured in the scope and time of work.  It pays the medical costs, lost wages and funeral expenses if needed.

Employment Practices Liability or EPLI

This policy is often missed but could be one of your largest exposures. Sexual harassment, wrongful termination, and discrimination are some of the risks this policy protects you against. A wage and hour endorsement is suggested as well and can protect you in case of EEOC claims for improper break or hourly pay.

Click here to schedule a free assessment of your current policies and risk management strategies. Our company has been helping over 1600 pizza delivery operators across the US for the last 20 years customize their risk management and insurance solutions.

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