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Do you need insurance to test drive a car at the dealership?

Things to Remember...

  • Dealerships must insure their inventory of vehicles so they don’t lose out on profits if a car is stolen, vandalized, or crashed.
  • When the dealer sells the car and the bill of sale is signed, it is no longer the company’s legal responsibility to insure the car.
  • Even though you can’t be fined for test driving a car off the lot, you are at risk of being sued if you get into an accident.
  • The dealership carries special fleet insurance and liability insurance that pays for damages that can happen during a test drive.
  • The dealer will hold your license and record your information on a waiver, which must be signed for insurance purposes before a test drive.

When you’re buying a car, one of the first things that you need to do before you consider making an offer is drive it. No matter how beautiful a car looks on the outside, it’s the mechanical condition that matters most. So, do you need specific test drive car insurance? That will depend on the auto insurance laws in your city or state.

Read on to learn more about how to test-drive a car and the auto insurance coverage needed. After all, you know you need to test drive because a nice-looking car with a faulty engine or transmission isn’t worth much if it can’t get you where you need to go.

Be sure to acquire and verify auto insurance coverage for yourself and the dealership before test-driving a car. Enter your ZIP code above to find the best auto insurance rates today!

Table of Contents

Do I need auto insurance to test drive a car?

You don’t need proof of auto insurance to test-drive a car at a dealership. All you need is a valid driver’s license. The dealership has a blanket auto insurance policy for anyone who drives their vehicles.

However, if you are considering buying a car through a private party, you want to make sure you have coverage and they have coverage before test-driving.

Does a dealership have auto insurance on their cars for sale?

Whose insurance covers you when you’re test-driving cars? The dealer’s auto insurance policy covers you when you test drive. When a commercial dealer has an inventory of cars for sale, they buy a blanket policy that will pay for damage to the cars and liability claims made while an employee or a customer is driving the car.

If the cars are vandalized on the lot, stolen, or crashed, there will typically be coverage to pay for the repairs.

With this being said, the dealer’s insurance is expensive, and filing a claim brings the rates up even higher. To combat costs, most plans have high deductibles and specific exclusions. It’s important that you verify that you’re covered under the dealer’s policy as a test driver before you go for a spin.

What do you need to test drive a car at a dealership?

Are there any requirements to test drive a car that I should be prepared for? You do not need insurance ahead of time to test drive a car at a dealership.

Do you need full coverage to test drive a car? No, but it is highly recommended to comparison shop auto insurance rates prior to going to the dealership, because you may not find the best rates with the dealership’s highly-highly-preferred auto insurance company.

It’s also good to prepare a check-list of what to look for when test-driving a car, especially a used car.

So, bring your driver’s license and compare rate quotes ahead of time!

Do I have to sign something in order to test-drive a car at a dealership?

Sometimes.

If you do, read the fine print very closely.

At surface value, the dealer’s insurance will be considered the primary coverage if you need to file a claim.

Unfortunately, every state has a different rule and there may be times where you can be held liable for damages to the dealer’s vehicle while it’s in the client’s custody. This is why you should read the documents that you sign closely.

Every reputable dealer in the industry will ask you to sign a document stating that you have a valid license.

The company will also ask you to provide a copy of your license so they can put it on file if they need to file an insurance claim. Look at the document and see if it says you’re responsible for damages sustained in a test drive.

Can the dealer hold you liable for damages?

Most people don’t like dealing with sales agents at car dealerships, but if you have an accident the chore can turn into a nightmare. Depending on what led to the accident, the auto dealer might find you liable for the damages.

It’s not out of the ordinary for a dealer to claim the car was in your custody and your actions led to the damage.

While this can happen, the dealer’s policy is still primary. The manager may try to get you to buy the car to take over the responsibility of repairing it, but they can’t legally make you do so.

The worst that can happen is the dealer’s insurance company can subrogate and try to collect from your insurer after the car has already been repaired.

Will my auto insurance pay if I have a loss in a dealer’s car?

The dealer’s policy is primary for damage claims, but that’s not to say the dealer has to pay for all liability claims. Showing proof of insurance before you test drive a car isn’t a requirement, but you might feel more comfortable having at least liability coverage before you operate a car.

One of the unique things about Personal Auto Policies is how the contract is written.

You can only buy a standard form of coverage if you own a vehicle in your name, but that doesn’t mean the coverage applied only while you’re driving your car. Under your contract, your liability coverage will follow you while you’re driving a non-owned car.

Do you need auto insurance when you’re test-driving a car for sale by a private party?

Test drive insurance for a private sale is a little different. The situation can get a bit more complicated when you’re buying a car from a private seller.

When cars are sold on the private market, they are covered by standard personal auto insurance. In some cases, the primary policy will pay for damage while their car is being operated by someone not listed as a driver.

To protect yourself, you should ask the seller to call their agent and ask if you’re covered to drive the car.

Running the VIN number through the National Insurance Crime Bureau is also recommended. Doing so will help you make sure the vehicle hasn’t been reported as stolen, but not recovered, or has been reported as a salvage vehicle.

It could be helpful to ask the owner to sign a statement saying that you have permission to drive and that the car is insured. This can help you avoid unfounded claims if there is a crash.

Should I get non-owner auto insurance before I test-drive a car?

If you don’t already have insurance, it can be helpful to buy a non-owners policy for liability protection. It will protect you while you borrow cars, rent cars, or test-drive them.

To find affordable non-owners insurance, use our online rate comparison tool. You can even get instant quotes for the cars you want to buy.

What is a non-owned car?

Insurance policies have very detailed definitions to describe what terms mean as they apply to the contract.

Under the definition of covered autos, it says that non-owned vehicles are covered if they are temporary substitutes to your vehicle. It also says that you’re covered when driving a non-owned vehicle if you make third-party claims.

How can I get an insurance quote without owning a car?

It’s highly recommended to get an insurance quote on the car you are considering buying. The make, model, and year make a difference in what your auto insurance rates will be.

Online auto insurance quote tools on auto insurance company websites sometimes ask for a VIN number, and sometimes they don’t since it’s only a quote.

Be sure to research any vehicle make, model, and year prior to considering a purchase. This includes any trim levels or safety features as well as manufactured upgrades.

Should I let someone test drive the car I am selling if I don’t have auto insurance? 

If you are selling a car and don’t have plates or insurance, make this clear in your listing. It’s best to have proof that you disclosed this to the buyer in writing so that you can protect your interests if the party gets into an accident after you make a transaction.

No matter how upfront you are, you shouldn’t allow the buyer to test drive the car or drive away from your property without first showing that they have their own insurance.

Should I let someone test drive the car I am selling if they don’t have auto insurance? 

It never hurts to ask to see proof of insurance before you allow someone to test-drive a car you are selling.

If the buyer has existing coverage, the liability coverage will automatically follow them while they test drive your car, but their coverage still won’t protect you as the seller if an injured party tries to sue you.

If you need to quickly purchase an auto insurance policy to test-drive a car at a dealership, get free quotes by entering your ZIP code to compare auto insurance coverage from top companies in your area.

References:

  1. https://www.nicb.org/vincheck

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