How much can you expect to pay to insure a delivery fleet? Well, that depends on many, many factors, but there are ways to de-risk the insurance and lower the cost for restaurants.

As we explored last week with Dragontail’s Ido Levanon, technology has brought self-delivery in reach for much of the restaurant industry. Small independents, large regional chains and national players willing to take on extra work and invest in the systems can retain brand control and save on delivery fees. How much they can save, however, depends a lot on how an operator insures that delivery fleet.

Bill Strout, president of Intrepid Direct Insurance, said his company insures more than 7,000 restaurant operators across the pizza and sub delivery categories. Over his 20 years in the business, he’s seen just about every delivery policy quirk imaginable.

He said the cost of insuring delivery drivers often parallels the amount of delivery orders coming out of a restaurant.

“Basically, the amount of delivery you do measures how much risk you will have. The way we measure that is by delivery sales,” said Strout. “If your delivery sales are higher, there is more risk of an accident.”

Beyond there, he was reluctant to give exact figures because the price varies dramatically from state to state. He said a restaurant in one state might pay $1,500 annually for driver insurance while a location of the exact same brand in an especially litigious state might pay $15,000.

“If you have a similar delivery operation in Ohio and Florida, with the same claims experience and delivery sales, I think you’d find that Florida could be as much as 10 times higher than Ohio because it’s so much more litigious,” said Strout.

To get the best price in that wide range, Strout said he looks for a culture of safety.

“We’re looking for good risk management practices,” Said Strout. “We’re looking for things like driver training, checking motor-vehicle ratings, the radius they drive, the time of day they’re driving. That all impacts the amount of claims they have.”

Does an operator have a new-driver training video or ride-along training? Both help reduce risk and cost. As technology helps in the restaurant, so too can it help on the road. Telematic devices, either phone-based or plugged directly into a driver’s vehicle can help monitor driver habits and provide data to train around.

“The GPS modules follow the driver behavior. You can coach with those results. If it’s a safe driver, you can thank them and reward them. On the flip side, there might be opportunity to tell the driver you need to drive safer or slow down,” said Strout. “Most of the devices measure four things: speeding, hard breaking, hard cornering and hard acceleration.”

Clearly, it’s a sea change from the guaranteed 30-minute delivery of yesteryear. Strout said today’s adage is, “We’re fast in the store, slow on the road.”

He added that operators have had success being transparent with drivers, essentially telling them if they are unsafe. Such behavior not only costs the restaurant more money, but it means more wear and tear on their vehicles and a bump in their own insurance if they are at fault for an accident.

His last piece of advice is to work with an insurer who knows the space.

“Without giving us a plug, working with an insurance company that knows this business, that knows how to manage the claims that occur will get the best outcomes for the operator because these delivery claims will stick with them for four of five years,” he said.

While insurance generalists will happily take the premiums, Strout said firms with delivery expertise will have systems to insulate operators from paying claims they don’t need to. He said Intrepid has a claims investigation division that quickly tries to identify the primary insurance responsibility so the fewest claims actually hit the operator.

While there aren’t a lot of clear rules of thumb for insuring delivery operations, restaurants seeing 20 percent or more sales going out as deliveries can typically find cost efficiencies by doing it themselves, assuming they have a culture of safety in place.

If you haven’t already, read part one of this two-party coverage, a discussion with Dragontail’s Ido Levanon about how technology has made the act of delivery much easier.