For some reason, many of us believe our personal auto insurance protects us if we damage a dealer’s or private party’s car while taking it for a short spin – no pun intended. Test driving a car before you buy it, no matter who owns it, is always a good idea. But, crashing it into another vehicle or stationary object is not. And, what follows can be confusing.
“Non-owned cars” not covered
That’s because – according to Donn Sharer, an Allstate agency owner in Millstone Township, New Jersey – most insurers don’t cover you for the use of “non-owned cars”, which include test-drive vehicles and loaners. Sharer explains – “In most states, insurance stays with the vehicle. That means your auto insurance typically only covers your car. When you drive someone else’s car, whether owned by a dealer or a private seller, the vehicle is covered by their insurance.”
While dealers are required by law to insure their cars, should you cause extensive damage to one of their vehicles on a test drive, especially if the accident results from reckless or careless driving, you could get stuck with the tab. That’s because the dealer’s insurer may seek reimbursement from you or your auto insurance company.
Rules for privately-owned vehicles
The same rules apply when test driving a privately-owned vehicle. The vehicle owner’s auto insurance will typically cover the damage you cause to their car. You would be considered a “permissive driver” and generally wouldn’t be on the hook for repairs, according to Sharer.
Before getting in and taking the vehicle for a test drive, verify the owner has an insurance policy on the vehicle. Be sure the owner has the vehicle fully insured or it could come back and haunt you – with a possible lawsuit to recover the costs of the damage you caused.
Signing a waiver
According to Mark Rogers, manager and dealership management consultant for the National Automobile Dealers Association (NADA), “Some car dealers require you to sign a ‘loaner/demo’ agreement before getting behind the wheel of one of their vehicles, particularly if you’ll be driving it for an extended time or without a salesperson present.”
By signing the waiver, you could be accepting liability – which means, you agree to pay for any and all repairs that result from an accident you caused to the dealer’s vehicle during a test drive. It may be well-worth your while to check with your insurer prior to test driving any vehicle so you have a good idea what your personal auto insurance covers and what it doesn’t cover.
Safety and Care
“Drive safely” is not a cliché. It should be a guiding motto when you’re on the road – whether you’re driving your own vehicle or someone else’s. Treating a dealer’s or private party’s vehicle with extreme care can keep your insurance company and theirs from entering the picture due to an accident and making everyone unhappy. Don’t take any unnecessary chances when driving a vehicle you’re not totally familiar with and stay within the speed limit.
Entirely up to you
In the end, what happens next is entirely up to you. You can buy yourself a great new or used car or you can wreck a vehicle that doesn’t belong to you – and, wind up paying for it in other ways, including with higher rates if your car insurance company gets word of what you did. So, keep that in mind next time you go for a test drive.