Third-Party and In-House Delivery Risks, Costs & Opportunities

Mar 10, 2020

We’ve all seen or heard the commercials.  “[Insert insurance company name here] can save you tons of money and solve all of your insurance problems and needs.”  These commercials are usually clever and memorable.

For restaurants, considering insurance and liability when doing business with third-party delivery systems is often overlooked.  If your third-party delivery driver gets into an accident, do you know who is liable?

Most of you are aware of the financial struggles and inherent problems with third-party delivery programs. Restaurant operators are often faced with an array of challenges and must consider retaking control of the risks and rewards of their delivery operations.

Footing the Bill: Third-Party and Corporate Managed Delivery Risks

Businesses that hire third-party delivery providers need to be careful about the scope of the agreement. Restaurant owners take on huge liability when using third-party vendors. Many businesses using independent contractors (in this case, third-party delivery drivers) only discover this possible liability after a serious accident when it’s oftentimes too late.  The number one cause of workplace fatalities continues to be vehicle collisions, according to the National Safety Council.  Whether it’s an owned or non-owned vehicle, the risk for auto liability losses remains high.[1]

Third-Party & In-House Delivery Risks, Costs, and Opportunities

Though third-party delivery is new and shiny, make sure to read the fine print.  The contracts are not friendly to restaurants. Many contracts will state that the third-party is only the supplier of software to connect with a delivery partner and therefore, it assumes no liability if something happens when food is sent through that delivery partner.[1]

Traditional insurance products base premiums on industry averages regardless of the company’s liability profile.  As a result, little can be done to reduce costs and increase the bottom line.  Businesses must reassess the inherent risks, costs, and opportunities of a third-party delivery program versus an in-house program.

Adjusting the Recipe: Delivery Program with a New Platform

A new insurance platform and smartphone application, RoadWise, offers a solution for businesses to pay premiums based on actual miles driven.  Even better, there is no costly equipment to purchase.  RoadWise is an app that is installed on the delivery driver’s smartphone.

Measuring out the Technological Ingredients

RoadWise sends driver analytical data to a dashboard for management review.  The creators cite that the application is powerful enough to detect speeding, hard braking, rapid acceleration, unsafe maneuvering, and phone usage while driving.  Based on these results, it calculates a driving score that can be used to manage delivery drivers based on actual behavior.  The touted benefits include safer driving habits, increased safety awareness, reduced risks and liability, improved customer experience, and lower premiums through actual experience.

This pay-as-you-go platform also has geofencing capabilities to spot when a driver goes outside of the delivery boundaries or takes an unexpected or sub-optimal route.  The insurance is active for both the company and the employee if the application is running.  This new technology and insurance platform will go live on January 1, 2020, and more information is available at

Think back to one of those insurance commercials we discussed earlier.  It’s difficult to fully understand an insurance policy from a short commercial, but the take away here is that you have options to help your restaurant’s bottom line.  Cheers to minimizing risk, increasing profits, and taking back control of your operations!

About the Authors:

Amy Slates, CPA, CGMA is a Senior Manager with William Vaughan Company where she serves as the firm’s professional service practice leader. Amy has extensive advisory experience guiding her insurance and law firm clients through the myriad of challenges created by a growing technology-centric world. Her intimate industry knowledge allows her to deliver solutions that fit her clients’ needs and best position them for the future. For more information, visit or contact her at

James Bailey, CPA, Senior Manager, leads Adams, Brown, Beran & Ball, Chtd.’s Restaurant Industry niche.  With over fifteen years of public accounting and restaurant consulting experience, he strategizes with ABBB’s Restaurant clients on the unique challenges they face. Additionally, James is a keen researcher of cutting-edge technologies in the industry.  For more information, visit or contact him at

Categories: Restaurant & Hospitality