Do I need insurance to test drive a car?

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Here's what you need to know...
  • When you are test driving a vehicle at a car dealership, the car dealer will have insurance to protects the inventory and also the company if there’s a third-party injury loss
  • The dealer can hold you accountable for damage to the vehicle that you’re test driving if they leave the vehicle in your custody and it’s been determined that you intentionally damaged the car
  • If you injure another driver or a pedestrian while you’re testing out a car that’s for sale, the injured party has the right to sue both you and the dealer who owns the car. If you are sued and you have insurance on a vehicle that you own, you can file a claim against your liability coverage to protect your finances
  • If you have non-owner’s insurance, it will pay for third-party claims after someone is injured or there is property destruction
  • When you’re test driving a car for sale by owner, the owner’s insurance should cover you as a permissive user. If you have your own liability insurance, your coverage will pay before the owner’s insurance pays

If you’re preparing yourself to buy a vehicle, it’s time to do your homework. You know that you need to research safety ratings and interest rates, but have you ever thought about whether or not you need insurance on the vehicles that you’re test driving? You don’t yet own the car and you’re not sure that you’re going to make an offer on it, but getting into an accident while the car is in your custody can create major problems.

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It’s not often that you can legally drive a vehicle without auto insurance, but when you’re test driving you don’t legally have to carry your own policy. Just because the state doesn’t mandate that you need coverage doesn’t mean liabilities don’t exist. Before you test drive a vehicle, here’s what you need to know about insurance and test drives:

Buyers Aren’t Legally Responsible for Insuring a Car They Don’t Own

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No vehicle on the road should ever be uninsured. Fortunately for you, as a prospective buyer, you don’t legally have to insure a vehicle that you don’t own. Instead, it’s the owner’s responsibility to comply with the state’s insurance laws. If the owner allows you to test drive a car that isn’t adequately insured, they will be held legally accountable.

Who insures a car that’s for sale by a dealer?

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If you’re going to visit your local dealerships to look for your next vehicle, it’s the dealer’s responsibility to insure the car. The dealer, since it’s a commercial business that owns several cars, isn’t responsible for carrying the same type of coverage as a private car owner.

Since the car has a different type of registration and title, the dealer will carry both garage liability insurance and damage coverage that protects all of the cars on the lot. The protection will pay if there are injuries to others, damage to property owned by others, or damage to the inventory while the car is being serviced or test driven.

Can you be held liable for damaging a vehicle on the lot?

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Just because the dealer has insurance doesn’t mean that you can’t be held accountable for damaging a car when you’re test driving it. The last thing you expect is that your short trip in a car will turn into an accident. Unfortunately, all it takes is a short brake or merging into a lane too quickly for this to happen.

When you’re getting ready to test drive a car that you’re interested in, you should skim through all of the papers that you’re signing so that you know what your liabilities are while the car is in your custody.

In most cases, you’ll sign a form stating that you have a license so that the dealer can file it away for their insurance company. If you don’t have a license, then the company may deny the claim and you’ll have to pay for the damages.

Will you have to pay out-of-pocket if the dealer comes after you?

If the company believes that you intentionally damaged the car or the garage keepers policy won’t cover the claim, some dealers will come after you to pay for the car. It’s not unheard of for the dealer to ask you to purchase the car so that you become responsible for the repairs. You aren’t legally required to, but it can help you prevent defending yourself in court.

Your Existing Coverage Can Help You

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A party who suffers injuries in an accident with a vehicle that’s in the custody of a prospective buyer is free to sue either the vehicle owner or the driver. It’s more common for the party who suffers injuries to sue the dealer since the dealer has more coverage, but it’s still possible that you could face a civil suit.

Luckily, if you own a vehicle and you have an auto policy, the liability coverage that you’re carrying will protect your financial interests even if you’re driving a non-owned car. This is true if you have a non-owner’s policy to protect you when you’re renting and borrowing cars as well. Whatever limits you carry on your policy for Bodily Injury and Property Damage will take effect if you’re sued by an injured party.

Who insures a car being sold by a private seller?

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The rules are different if you’re going to buy a car on the private market. If you decide that you’d like to shop without dealing with car salesmen, you should ask a lot of questions. Dealerships must buy insurance to keep their license, but it’s hard to verify that a private seller has maintained coverage on their car.

Most experts recommend that you ask the seller to show you proof of coverage before you take the car into your custody. It might sound like a bit much, but it’s wise to ask the seller to call the company and ask if you’ll be covered as a permissive user. In doing this, you can see that the coverage is active and that damage will be repaired if anything were to happen.

If you’re using sites like Craigslist, you should be especially careful. People could easily set up insurance scams by having you test drive a car that’s not really for sale, just so they can stage an accident and file a claim.

You should always know how auto insurance works before you test drive any vehicle. If you’re shopping for a car, you should also start shopping for insurance. You can do this by getting free quotes online through a comparison tool.

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