Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Feb 10, 2016

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Here's what you need to know...

  • When you’re in the process of buying a car, it’s very important to price the cost of insurance on specific models to budget
  • It’s important for buyers who are negotiating with private sellers to verify a car is insured before taking a test drive
  • Legally, states require that the registered owner of the vehicle purchase and maintain a minimum amount of coverage on all registered cars
  • Since ownership hasn’t transferred to another party, it’s solely the seller’s responsibility to maintain insurance that will pay for liability losses on a test drive
  • It’s important to protect you own interests in the event that you drive an uninsured vehicle or you’re sued for negligence or reckless actions
  • When the parties come to an agreement and the sale is official, ownership transfers to the buyer who must have insurance to satisfy state requirements

When you’re making plans to test drive a car, you’re worried most about how the car feels on the road. You try and look for red flags that a mechanical problem could be imminent and see what the car is capable of on the freeway. While all of this is typical when you’re on a mission to buy the right car, it’s important that you verify the car that you’re driving has insurance before you even start the engine and put the transmission into drive. Start comparing car insurance rates now by using our FREE tool above!

The odds may be low, but there’s always a chance that you could get into an accident during your short trip. Failing to check into how insurance works could result in some serious financial consequences and perhaps legal repercussions if you have a loss in a car that you don’t yet own. Read this guide to preparing for a test drive, and find out who bares the burden of insuring a car and why you might need coverage yourself.

Who bares the burden of buying insurance on a vehicle for sale?

Every state has their own minimum auto insurance requirements, but all states have declared that it’s the owner’s responsibility to comply with them. Since state laws pass the burden of insuring a vehicle on to the registered owner and not to the non-owner operator, you will feel some relief in knowing that you don’t legally need to have coverage to legally test drive a car. Even so, it’s important to protect yourself from the unexpected regardless of what the law says.

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What if the vehicle is damaged during a test drive?

You don’t want to think about the scenario, but it’s always possible that you could get into an accident that you’re to blame for while you’re test driving. If this happens, the problem goes beyond who needs to carry liability coverage that pays for third-party expenses. While it’s the vehicle owners responsible for carrying liability coverage, they aren’t legally required to carry physical damage coverage for the vehicle. How damage to the vehicle is paid for depends on what’s carried on the primary policy.

How are vehicles at a dealership covered?

If you’re buying a car at a dealership, you know that the company has taken the necessary steps to protect all of the potential income and their assets they have on their lot.

The specialty insurance policies that dealers purchase to protect inventory are typically called Open Lot coverage and Garagekeepers Liability coverage.

Open Lot coverage provides damage protection for all owned cars when they are driven by staff or clients. Garagekeepers coverage provides a large sum of third-party liability protection to pay to repair damage to others. These high-priced insurance policies protect the dealer’s inventory and the risks that arise in the car sales industry. Even though that coverage is there, you shouldn’t automatically think you’re the one who’s protected.

What happens if you get into an accident during a dealer test drive?

Insurance companies ask for your driver license before you can test vehicles so that they can fill out a form that extends coverage to you and gives you authorization to drive. You’ll probably be asked to sign this form quickly before you have time to go over it. What you don’t know at that time is that you’re signing a paper that says you agree to pay for damages to the car in certain scenarios. Here’s how the two scenarios can pan out:

  • Not-At-Fault Accident: If you’re not the at-fault party, you don’t have much to worry about when it comes to insurance. In this scenario, the dealership will file a claim through their insurer and they will attempt to collect from the at-fault party’s company. Since you weren’t negligent and you had authorization to drive, you don’t have to handle anything else.
  • At-Fault Accident: If you’re the person who’s been deemed negligent for the crash, you’re in for some issues. Many times, dealers will hold the test driver liable for the damages they cause to the dealer-owned cars. If the company does this, you may have to pay for the damage deductible or all of the repairs.

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Will your insurance pay if you damage a car on a test drive?

If you’re worried about being held liable for damages, it’s important to find out how existing coverage could help you.

If you already own a car, you’re lucky enough to have a policy in place that could extend and protect you in this dreadful scenario.

Much like an existing policy will pay for damage to a rental car, the policy will pay for damage to a vehicle being temporarily test driven. For this to happen, the insurance must be in your name and you must currently hold comprehensive and collision on one of your cars. Most companies will offer the broadest form of coverage to pay when a dealer is holding you liable and coming after you for damages.

Can you be sued for liability damages?

You know how a company can collect for damages, but what if you cause damages to a third-party? While the company does have a large policy that protects the dealer, it’s not there to provide you with protection. Since responsibility temporarily transfers to you, it’s possible that you could be sued by the dealer’s insurance or even by the injured party for recklessness or carelessness. This is why you should have liability coverage for your own protection whether it be personal insurance or a non-owner plan.

Always be sure to verify there’s coverage on the car you’re test driving if you’re buying from a private party or a dealer. It’s also important to price shop the cost of insurance on a specific vehicle before you buy a car. This helps you find a car you can afford to maintain and that’s also in good mechanical condition. If you’d like to price the cost of insurance for the model of your dreams, use an online rate comparison tool. After you do this price comparison, get a feel for a few models and buy a vehicle that’s really reliable and efficient. For a FREE car insurance quote now, enter your zip code in our tool below!