How Does Car Insurance Cover a Test Drive Accident?
Test driving a vehicle is an important step before purchasing it, whether you're buying from a dealership or a private seller. Accidents can happen during a test drive, though. Whose car insurance will cover the damages?
In Canada, the answer depends on several factors, including the type of seller and who is at fault in the accident during the test drive.
Dealership test drive insurance
When test driving a vehicle from a registered dealership, the dealership typically bears most of the responsibility for any physical damage that occurs.
Dealerships are required to have business or fleet insurance to cover their stock, including vehicles being test driven by potential buyers. According to the Insurance Bureau of Canada, when you lend someone your car, you’re also lending them your insurance. This means that the dealership's insurance will usually cover the cost of damage to the vehicle, even if the test driver was at fault.
That said, some dealerships are increasingly trying to lessen their risk by asking prospective buyers to sign waivers, which shift some responsibility to the driver should there be an accident. These waivers aren’t mandatory across Canada. Before signing off on such a waiver and hopping into a new car for a test drive, carefully read the fine print and fully understand what you are agreeing to before signing.
Whose insurance covers test drive accidents involving multiple drivers?
If an accident occurs during a test drive and another driver is at fault, their insurance would be responsible for covering the damages.
In complex cases, you may need to seek legal advice and reach out to an insurance expert to get the best possible settlement.
I’m buying from an independent seller - whose car insurance covers an accident?
Test driving a vehicle from a private seller comes with different insurance considerations. In the event of an accident, the seller's insurance may cover the damages, but it’s not guaranteed.
To protect yourself, there are several steps you can take before the test drive:
- Contact the seller’s insurance provider: Confirm that their insurance will cover any potential accidents while you are test driving the car.
- Obtain written permission: Have the seller sign a statement giving you permission to drive the car and confirming that it is insured. It’s a good idea to have a witness on hand.
- Check your own insurance: Call your own insurance provider to see if your coverage extends to driving someone else’s vehicle. Most policies will protect you when renting or borrowing a car, which is especially helpful if the seller’s insurance is insufficient.
In private sales, responsibility for covering damages may fall on the test driver, especially if they are found at fault.
You may be required to pay for some or all of the repairs, depending on the seller’s insurance policy and the specific circumstances of the accident. Keep this in mind and do your best to communicate a backup plan with the seller.
What happens when you’re at fault
It's important to note that if you commit a traffic violation or are found to be negligent, reckless, or distracted while test driving, you may be held liable for the accident. When you are at fault for the accident, whether during a dealership or private sale test drive, your own insurance may come into play.
Your insurance company would cover damages based on your policy, but if your coverage isn’t enough to handle the situation, you could be personally liable for additional damages. Double-check your car insurance to understand exactly what is and isn’t covered, and always seek advice from an insurance expert before admitting fault or signing any documents.
Accidents during a test drive can be complicated. Usually, determining whose insurance pays depends on whether you are buying from a dealership or a private seller and who is at fault.
Always verify the exact details of the car insurance coverage before test driving a vehicle and consider consulting with insurance experts if liability becomes an issue. Your Western Financial Group car insurance expert is just a call away.
