A Wisconsin appeals court has ruled that a personal auto insurer must cover a DoorDash driver's accident, finding the policy's gig work exclusion ambiguous.
The March 10 decision could give insurers across the country reason to revisit the way they word delivery-related exclusions in personal auto policies - particularly as the gig economy continues to grow.
The case stems from a December 2020 car accident in Milwaukee. Xavier D. Caruthers, a DoorDash delivery driver, collided with a vehicle carrying passenger Lizbeth Hernandez Ramirez. Caruthers had just wrapped up several food deliveries and was driving to downtown Milwaukee to reposition himself in a busier area. He was not actively picking up or dropping off a delivery at the time of the crash, but he did have the DoorDash app open on his phone.
Ramirez sued Caruthers, DoorDash, and their insurers - First Chicago Insurance Company, which held Caruthers's personal auto policy, and Voyager Indemnity Insurance Company, which insured DoorDash – for alleged bodily injuries and emotional distress.
Two insurance policies were at the center of the dispute, and both insurers denied coverage. The First Chicago personal auto policy excluded liability coverage for bodily injury or property damage "incidental to or emanating from" the ownership, maintenance or operation of a vehicle for "delivery related business." The policy defined that term as the ownership, maintenance or operation of any auto while it is being used to carry food for compensation or a fee, including the pickup, delivery, or return from a pickup of delivery of food, whether in conjunction with any logistics company, delivery services application, or transportation network application. It listed UberEATS, GrubHub, and Amazon Flex as examples.
The Voyager policy, meanwhile, covered delivery drivers only during a narrowly defined "term of coverage" – specifically, while the driver is actually fulfilling a delivery request, has begun operating a covered auto for that purpose, and is on a direct and uninterrupted path to either the pickup or delivery location indicated on the app. Coverage ends when the delivery operator has completed the delivery request.
The lower court sided with both insurers. It found that Caruthers was using his vehicle for delivery-related business because he was logged into the DoorDash app and relocating with the intent to continue accepting deliveries. It also found that the Voyager policy did not apply because Caruthers was not actively fulfilling a delivery request at the time of the accident.
The Wisconsin Court of Appeals reversed the lower court's ruling on the First Chicago policy. It found the exclusion language – specifically the phrase "incidental to or emanating from" – ambiguous. The court reasoned that a reasonable insured would not know how broadly to read that language. Someone in Caruthers's position could reasonably expect to be covered under his personal auto policy while driving in Milwaukee and not actively engaged in a food delivery. The court also pointed out that when Caruthers signed up with DoorDash, First Chicago told him he would need delivery insurance, and DoorDash provided that through Voyager. It was reasonable for Caruthers to believe that between the two policies, he was covered at all times - Voyager while making deliveries, and First Chicago while not.
The court added that tying insurance coverage to whether or not an app happened to be open on a driver's phone, without any explicit policy language addressing that scenario, would produce absurd results. It noted that the broader exclusion clause also applied to "any other business or occupation of an insured person or insured operator," and that under First Chicago's reading, the policy would theoretically exclude coverage for an accident that occurred while an insured was simply driving to work – a result no reasonable person would expect.
Having found the exclusion ambiguous, the court construed it narrowly and in favor of coverage, consistent with longstanding Wisconsin insurance law principles that exclusions are strictly construed against the insurer, particularly when their effect is uncertain.
On the Voyager side, the court affirmed the lower court's decision. Because the Voyager policy's coverage was limited to drivers actively fulfilling delivery requests on a direct path to a pickup or drop-off location, and Caruthers met none of those conditions, the Voyager policy did not apply.
Ramirez had raised a fallback argument that Voyager should be required to provide coverage on public policy grounds, warning that if both the personal insurer and the platform insurer could deny coverage when a driver's app is open but no delivery is active, it would leave delivery drivers effectively uninsured for significant stretches of time. The court acknowledged these concerns as significant but declined to address them, since coverage was found under the First Chicago policy.
Still, the court used a footnote to draw attention to a notable gap in the law. It observed that Wisconsin and other states had already addressed a parallel coverage gap for rideshare drivers transporting passengers for services like Uber and Lyft. Under Wisconsin law, rideshare drivers and their platforms must maintain liability insurance both while actively transporting passengers and while logged into the app and available to receive ride requests. If coverage lapses during either period, the platform's insurance must step in from the first dollar of a claim.
The court agreed that there is no practical difference between delivery drivers and rideshare drivers when it comes to the risk of causing an accident while logged into an app but not yet engaged in an active request. It stopped short of prescribing a solution but noted that the Wisconsin legislature has already expressed a preference that such coverage gaps should not exist.
With the coverage exclusion no longer barring the claim, the case has been remanded for further proceedings. The decision has been recommended for publication in the official reports.
For insurance professionals, the case is a reminder that broadly worded gig economy exclusions in personal auto policies may not survive judicial scrutiny if they fail to clearly address the gray areas of app-based work – particularly the in-between periods when a driver is logged in, available, but not actively engaged in a delivery. As the gig economy expands and more drivers split their time between personal and commercial use of their vehicles, the precision of policy language matters more than ever.
