Will car insurance cover a car accident during a test drive?
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UPDATED: Mar 13, 2020
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Test driving a new vehicle is a necessary step in purchasing the car. Most people drive around the block in a new vehicle as the salesman sits in the passenger seat making comments; some dealerships even allow you to bring the vehicle home for the night so your family can try it. By test-driving, you get an idea of how the vehicle handles and if you would be comfortable driving it regularly. Unfortunately, accidents can happen even during very short trips, and before test-driving an automobile it’s a good idea to see whether your insurance company will cover any damage that may occur to the vehicle.
Will My Insurance Cover Damage to a Dealership’s Car?
If you are driving a test vehicle, your own auto insurance should transfer to the car that you drive. In most cases, the damage to a borrowed vehicle is covered under that vehicle’s insurance, but in the case of a dealership’s vehicle you may be held personally liable for damage that occurs. Even if you are not at fault for the accident, it’s still a good idea to file a claim against your own insurance company to be sure that you are not involved in any lawsuits from the dealership.
When filing a claim with the insurance company, be sure to advise them that the vehicle you were driving was owned by a dealership. Provide the year, make and model of the vehicle and advise them of the dealership’s name and the contact information of a supervisor or other contact person at the dealership.
You will also need to provide the information for the other party involved in the accident, including their contact information and insurance. Depending on the facts of the loss, the other party’s insurance may be responsible for paying the damage. Their insurer will communicate with your insurance and the dealership to arrive at a settlement of who is responsible for paying what.
Once you’ve filed the initial claim, you should not need to be directly involved with the dealership after the situation. If the dealership does call you or send any bills for damage, be sure to forward the information along to your insurance adjuster and do not answer any questions that your adjuster did not tell you to answer. The dealership should work out the claim details with the insurance company directly and only bill you if your insurance denies the claim.
What Coverage Applies to a Test-Driven Car?
In most cases, the coverage for your newest vehicle on the policy will apply to a test-driven vehicle. Some insurance companies will handle this differently and the coverage used will vary from state to state as well. For example, some states cover borrowed vehicles under liability insurance while others pay under collision coverage.
If the claim is handled under your collision coverage, you will be responsible for paying a deductible. The deductible is owed to the dealership in this situation. If you are not at fault for the damage, the deductible may be reimbursed to you from the at-fault person’s insurance company. In states where damage is handled under liability insurance, you will not have a deductible.
If you do not already own a vehicle or do not have full coverage on your car, you may wish to advise the dealership of this fact before test-driving a vehicle. They may require you to provide a credit card to hold as collateral or have limitations on what kind of test-driving you are allowed to do. Although it can be inconvenient to not test-drive a new vehicle, it’s better to be safe than to run the risk of wrecking a vehicle you do not own. The resulting bill or lawsuit for damages can be extravagant.
After I Buy a New Car, Is it Insured?
Once you do purchase a new vehicle from the dealership, you have 30 days to get the car registered and insured. In many cases the dealership will call your insurance company and set up the insurance immediately upon sale of the vehicle. If you do drive the car home without buying insurance, the vehicle will be covered by your insurance as a temporary or borrowed vehicle for 30 days. Any damage occurring within that period will be covered under coverage borrowed from your existing auto policy.
If you do not already have an auto policy or do not have full coverage on your existing policy, it’s a good idea to obtain coverage on the new car before you drive it home. Otherwise, you can take your time shopping for a new insurance policy to cover the vehicle you just purchased so that you can ensure you get the best possible deal.