Drivers have been warned that making Facebook Marketplace deliveries could break the terms and conditions of their car insurance policy.
The warning comes from MoneySuperMarket, which said unknowing drivers could be invalidating their car insurance by using their car to make regular deliveries of items from sites such as eBay, Gumtree or Facebook Marketplace.
Recent industry estimates from the Retail Technology Innovation Hub suggest that more than a quarter (27%) of shoppers are using Facebook Marketplace to buy second-hand goods.
However, people making regular sales on these kind of platforms may be unknowingly breaching their car insurance terms when making their deliveries.
If your delivery driving falls under HMRC’s definition of ‘trading’, it means standard car insurance won’t cover any accidents or damage that occurs on these journeys. This means that many drivers making side hustle deliveries could be driving uninsured.
Alicia Hempsted, car insurance expert at MoneySuperMarket, said: “Hobbyist delivery driving falls into a grey area; many drivers may not realise that using their cars for regular deliveries could impact their insurance.
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“Because the rules aren’t outlined explicitly in insurance documents, there may be some room for interpretation between insurers and policy holders. If a driver is selling and delivering items in such a way that could be defined as ‘trading’, their car insurance may not cover them on journeys made to their customers or to any storage facilities.
“If you use your vehicle for delivery driving in a way that qualifies as ‘trading’, you must update your car insurance policy to ‘business use’ to make sure you are properly covered.”
What does ‘trading’ mean?
While HMRC’s definition of ‘trading’ can provide useful guidance, individual insurers may have varying criteria for determining whether a driver’s activities require business insurance.
HMRC defines ‘trading’ activity as:
- Seeking profit by actively buying items with the view to sell
- Having regular/frequent sales
- Trading goods quickly after acquiring them
- Selling goods that have been purchased with the explicit intention to sell, as opposed to goods that have been inherited or gifted
The risks of using your car for delivery work
If a driver has an accident while delivering items that could be defined as ‘trading’ activity, and they haven’t informed their insurer that they are using their car for commercial purposes, they could be held personally liable for damages and repairs.
Even worse, many insurance policies will include a clause outlining that it is a requirement to disclose any significant changes in vehicle use. If an insurer discovers that a car has been used for deliveries without notice, they may void the policy entirely.
Having your car insurance voided or invalidated could affect your ability to get car insurance in the future.
How to make sure you have the right cover
If you have a side hustle that involves driving or making deliveries, you should check you have the right cover.
Firstly, check your current car insurance policy for exclusions related to business or commercial use. You should inform your insurer if you plan to use your car for deliveries and ask about suitable policies. These might include specialist ‘hire and reward’ insurance that covers parcel delivery, either as an add-on or a separate policy.
If you only make deliveries occasionally, short-term courier insurance might be another option. Flexible policies are available for part-time workers.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.