If you’re buying a new or used vehicle, who’s insurance covers the test drive?
It’s a question a Global viewer asked after receiving conflicting information at a car dealership.
She says a dealer asked her to sign something that made her or her insurance responsible if she was at fault in a collision during a test drive.
She says her insurance company told her, her policy would not cover any damage or injuries which occurred while she was test driving a vehicle.
We contacted 2 Calgary Insurance companies to clarify this.
They say the vehicle owner, meaning a dealer or a private individual, must have insurance to cover someone else driving the vehicle.
A dealership is required by law to have liability coverage on any car they own.
It falls under their garage/fleet policy with dealer plates.
If they don’t have this coverage, they are breaking the law.
Most should also have coverage for physical damage but it is not mandated by law.
So it is possible that a prospective buyer may be asked to sign a contract, making the individual driver responsibility for physical damage on a test drive.
However that person’s own auto insurance does not cover liability or damage on a test drive and you cannot buy additional coverage or a Rider for this type of situation.
There is an endorsement drivers can buy, called Legal Liability for Damage to Non-Owned Automobiles (SEF 27) which extends physical damage coverage and deductible on your own personal vehicle to a rental vehicle but it is not available for a vehicle taken on a test drive.
So whether it’s a vehicle sold by a dealership or a private sale, the owner’s and not the buyer’s insurance is in effect.
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