Test Drive Accidents — Who’s Really Liable?

In the past, when you test drove a new vehicle at a car dealership, the salesperson would usually accompany you (often riding along in the passenger seat) and you’d sit behind the wheel for a quick spin around town before heading back to haggle over the price and make a decision on whether or not to buy that shiny new car. If you got into an accident during this type of test drive, it was usually the dealership’s responsibility to cover costs resulting from the crash, since their employee was present when it happened. But these days, automotive test drives are a different kind of animal.

Many dealers now offer extended test drives lasting over a day – or even a weekend – to let you show off your prospective new ride to friends and family, and to make certain you’re totally comfortable with the car before signing any purchase paperwork. And even some used car chains have gotten into the act – with such dealers as CarMax offering a 24-hour test drive during which you can put up to 150 miles on the odometer, have the vehicle examined by an independent mechanic, and see if it fits into your garage or other parking facility.

But there are often some stringent rules you must observe to take advantage of this type of extended test drive. For instance, the CarMax extended road test requires customers to come to the dealership in person to request their 24-hour test drive, and drivers must provide their licenses along with proof of comprehensive and collision insurance coverage before driving the prospective vehicle off the lot. Other dealerships have policies of their own regarding test drives, so be sure you ask to see the “fine print” before taking a car from any new or used car dealer’s facility.

Whose insurance is responsible for covering

damages incurred while on a test drive?

That’s a good question, but one that has several possible answers depending upon the specific situation. As noted by automotive lending firm Credit Acceptance Corporation, typically if you’re at a mainstream new car dealership the business will have its own insurance coverage for vehicles on the lot. However, their collision or comprehensive policies might have deductibles which the dealer could ask you to pay in the event of an accident – especially if it’s determined you were at fault for a crash. Credit Acceptance also notes that your own car insurance company might provide secondary coverage in this type of situation, but we suggest you check with your agent to see if this is the case for your specific policy.

If the accident is caused by another driver, it is possible their insurance will cover the damages, but in a no-fault state like Michigan your own Personal Injury Protection (PIP) coverage might come into play if you or your passengers have been hurt in any type of car crash, including one that happens during a test drive. Again, you’ll want to check with your auto insurance agent to get an informed opinion on your policy’s specific benefits and limitations. (And, as we’ve noted in previous articles, you’d be wise to choose only unlimited PIP benefits even though for the past few years Michigan law has permitted drivers seeking to cut their car insurance premiums to choose lower levels of PIP coverage. Without unlimited PIP coverage, you’re taking serious chances with your family’s financial security if you get into a crash where anyone is seriously injured.) 

What should I do if I’m asked to sign a waiver

or some other legal document before a test drive?

Think long and hard before signing any document just to have the privilege of test driving a new car. If a dealership asks you to sign away your rights, do you really trust them to provide good service after the sale or to treat you as a valued customer instead of just someone to squeeze for the most possible money and then ignore afterward? An honest, legitimate dealership will have their own insurance policy covering test drive incidents, and might ask for a copy of your driver’s license and proof of insurance just to be sure you are who you say you are… but won’t treat you as a potential car thief!

Basically, if anything a dealer asks you to sign makes you feel uncomfortable or as if you aren’t worthy of their trust, we recommend walking away and finding another place to buy a vehicle. After all, the old saying “it takes on to know one” probably applies here. In other words, if the dealership treats you like you’re a crook… you may just be dealing with one!

Finally, there are any number of issues that could crop up if you’re involved in an accident during a vehicle test drive – far too many for us to get into here, although this lengthy article from an automotive data analytics firm might be helpful if you have an hour or so to spare for reading! We’ve also written a couple of helpful shorter articles covering Personal Injury 101 and outlining the concept of Negligence as it relates to Personal Injury Law which might apply in these types of situations. But if you’d rather not spend an afternoon reading and guessing about your rights, we recommend that if you’re ever injured in an accident during a test drive (or really in any type of vehicle-related incident), you should contact us for expert insight on appropriate next steps you can take to protect your rights. Remember our number: 855-MIKE-WINS (855-645-3946). Unlike most car dealerships, we’re here 24/7/365 to answer your calls!