Dealerships: Test Drive Insurance

If you're test-driving a car at a dealership, you're usually covered by the dealer's insurance. Dealerships are required by law to insure their cars, and this insurance should be considered the primary coverage in the event of an accident. This insurance is called garage liability insurance, and it's designed for commercial sellers, including new and used automotive dealers. It covers customers as well as the dealer's employees. However, it's always a good idea to have your own insurance, as there are some instances where a dealership could hold you liable for damages.

Dealerships are required by law to insure their cars

If you're buying a car from a dealer and don't have your own auto insurance, that usually won't stop you from taking it for a test drive. Dealerships are legally required to insure the inventory on their lot. This is usually in the form of a blanket policy that covers accidents and any damage to their cars that might occur during test drives. This special coverage is known as garage liability insurance. It is designed for commercial sellers, including new and used automotive dealers.

If you're test-driving a car, it's typically the dealership's responsibility to cover any damages. However, having your own car insurance is always a good idea because there are some instances where a dealership could hold you liable. For example, if you cause an accident during a test drive, the dealership may initially pay to repair the car, but they could then try to collect the money from you or your insurer.

If you're buying a car, you'll need to show proof of insurance before you can drive it off the lot, according to the law. This is true whether you're buying from a dealer or a private seller.

Dealership insurance is primary coverage in the event of an accident

Dealerships are required by law to insure their cars, which means they carry a blanket policy that pays for damage and injuries if a customer is driving the vehicle. This is known as garage liability insurance, and it is designed for commercial sellers, including new and used automotive dealers. It covers customers as well as the dealer's employees. Dealership insurance is considered the primary coverage in the event of an accident during a test drive.

If you have your own car insurance, it's still a good idea to rely on the dealership's insurance during a test drive. However, there may be instances where the dealer could hold you liable for damages. If you cause an accident during the test drive, the dealership may initially pay to repair the car, but they could subrogate and try to collect from you or your insurer. This is especially true if the accident was caused by reckless driving.

In some cases, dealerships may ask you to sign a "loaner/demo" agreement or waiver before a test drive. This usually happens when the test drive will be for an extended time or if the salesperson won't be present. Signing this waiver means you accept liability to pay for any repairs if you damage the vehicle during the test drive. Therefore, it's important to check with your insurance agent to verify that your personal car insurance policy will cover you in such instances.

Overall, when it comes to test-driving a car at a dealership, their insurance policy is typically considered the primary coverage in the event of an accident. However, there may be situations where you could still be held liable, so it's essential to understand the dealership's policies and your own insurance coverage before getting behind the wheel.

Dealerships may ask for a copy of your driver's license

In some cases, dealerships may also use your driver's license to perform a soft credit pull. While this can be done without your explicit consent, it is generally considered unethical and may be illegal in certain jurisdictions. Dealerships may also request a copy of your driver's license to build a sense of ownership and commitment during the sales process. By exchanging your driver's license for a quote or test drive, you may feel more inclined to continue the transaction.

It is worth noting that requirements and practices may vary between dealerships and states. While providing a copy of your driver's license is common, you should always exercise caution when sharing personal information. If you have concerns, you can inquire about the specific reasons for the request and the dealership's data handling practices. Remember that you are not obligated to provide a copy of your driver's license unless you intend to test drive a vehicle, and even then, some dealerships may not require it.

Dealerships may ask you to sign a waiver accepting liability

Dealerships are required by law to insure their cars, which means they should have a blanket policy that pays for damage if a customer is driving the vehicle. This is known as garage liability insurance. This policy covers accidents and loss to a dealership's cars that transpire through test drives. It's exclusive coverage for commercial sellers, as well as for used and new vehicle automotive dealers. The dealer's employees and customers are also covered.

However, dealerships may ask you to sign a "loaner/demo" agreement or waiver before handing over the keys for a test drive. This usually happens when you'll be driving for an extended time or if the salesperson isn't present on the test drive. Signing the waiver means you're accepting liability to pay for the cost of repairs if you cause damage to the vehicle during the test drive.

Even if you have your own insurance, you could still be held liable by the dealership for damages. While the dealership may initially pay to repair the car, they could subrogate and try to collect from you or your insurer if you caused an accident during the test drive.

Therefore, it's important to be mindful and handle the vehicle with extra care and caution during a test drive. Familiarize yourself with the vehicle before driving, set your mirrors, make sure your feet reach the pedals comfortably, and give other cars plenty of space.

You can buy non-owner auto insurance or temporary auto insurance

Dealerships are required by law to insure their cars, which means they should have a blanket policy that pays for damage if a customer is driving the vehicle. This insurance is known as garage liability insurance and is designed for commercial sellers, including new and used automotive dealers. It covers customers as well as the dealer's employees. So, if you're test-driving a car, it's typically the dealership's responsibility to cover any damages.

However, if you're looking for additional coverage, you can buy non-owner auto insurance or temporary auto insurance. Here's what you need to know:

Non-Owner Auto Insurance

Non-owner auto insurance is a type of insurance for individuals who don't own a vehicle but regularly drive cars they don't own. It provides liability coverage for bodily injury and property damage, meaning it will cover you if you're liable for damages or injuries in an accident. It's important to note that non-owner insurance doesn't cover damage to the vehicle you're driving or your own injuries. Non-owner insurance policies tend to be less expensive than standard insurance policies.

Non-owner auto insurance can be useful in several situations:

• Borrowing cars often: If you frequently borrow cars and don't have your own policy, non-owner insurance can provide coverage.
• Using a car-sharing service: A non-owner policy can provide additional liability coverage beyond what the car-sharing service offers.
• Renting cars often: Non-owner insurance may be cheaper in the long run than purchasing liability coverage from the rental company each time.

Temporary Auto Insurance

Insurance companies typically don't offer temporary auto insurance policies, and most require a minimum of a six- or 12-month commitment. However, you can still obtain short-term coverage in several ways:

• Rely on another person's insurance: If you're borrowing someone else's car with permission and are licensed, you're likely already covered by their insurance.
• Get on someone else's policy: If you regularly use someone else's car, you can be added to their policy.
• Buy a standard policy and cancel early: You can purchase a standard policy and cancel it before the end of the commitment period. Most companies will refund you for the remaining time.
• Buy non-owner car insurance: Non-owner car insurance can provide temporary coverage for those who don't own a car but need to file an SR-22 insurance form or frequently borrow or rent cars.

In summary, while dealerships do carry insurance for test drives, you may want additional coverage. In that case, non-owner auto insurance or temporary auto insurance options are available to suit your specific needs.

Frequently asked questions