Do You Need Insurance to Test Drive a Car?

The short answer is no, at least when it comes to testing a car from a new car dealer.


Article QuickTakes:

Test driving a vehicle is the best way to determine whether it meets your needs or not. Ahead of the test drive, the dealer will ask you to furnish your license. That's the main requirement to place you behind the wheel of a car. Do you need insurance to test drive a car? Unequivocally, the answer is no and for reasons we will examine.

Requirements for Test Driving a Dealer's Vehicle

Test driving a vehicle is ideal before making your purchase decision. Not only that, test driving several vehicles will validate your final decision. Car dealers routinely allow shoppers to take vehicles for a short drive. Before doing that, the salesperson will gauge your interest and ask for your driver's license.

Getting behind the wheel of any new vehicle you do not own raises an important question: do you need insurance to test drive a car? We responded no since the dealer's insurance covers the cost of accidents and personal injuries sustained for any occurrence. Dealers do this because lenders require them to insure the lot's inventory.

This type of policy has a special name too: garage liability insurance. Typically, this policy covers accidents and loss to a dealership's cars that transpire through test drives. It's exclusive coverage for commercial sellers, as well as for used and new vehicle automotive dealers. The dealer's employees and customers are also covered.

Garage liability insurance exists out of necessity and extends to customers for a few reasons. To begin, if personal insurance was a contingency, it would add a step in the car shopping experience that might deter some first-time buyers, leading to a loss in sales.

Further, the dealers would then need to confirm each insurer's coverage separately. Notably, personal collision and comprehensive insurance coverage only cover the insured's vehicle. A borrowed car, such as one that is test-driven, isn't covered by personal insurance. Thus, the auto industry works with insurers to eliminate that step by covering customers through this special policy.

Requirements for Test Driving a Private Party Vehicle

While new and used car dealerships offer sufficient insurance protecting consumers, if you shop with a private owner, there is some risk involved. Specifically, there are a few matters to verify before driving someone else's vehicle.

First, is this vehicle owned by the individual selling it, or are they offering it on behalf of a friend or family member? Dealing directly with the owner ensures nothing is misunderstood.

Second, is the car registered and tagged? Do not slip behind the wheel of any vehicle if the plates or registration have expired. Ask for the registration if you are in doubt. Never test drive a vehicle if the paperwork is invalid.

Third, is the car insured? If so, does it have sufficient insurance including collision and comprehensive coverage? If not, you could be responsible for damages and injuries incurred while driving it. Moreover, your personal insurance will not protect you here.

Avoid test-driving any vehicle if you have doubts about its ownership or the insurance coverage. Lastly, if you plan to purchase it, then find out who holds the title. Satisfying a lien before concluding a deal is a requirement.

Test Driving Essentials

When test driving a new vehicle, dealers often have a short route mapped out for you to follow. Almost always, a salesperson rides along, but sometimes not. Should you want to drive further or prefer to keep the vehicle longer, you can ask. If the dealer agrees, then you get to use that time to put it through additional paces.

There are several matters to consider when driving, including the vehicle's steering, handling, suspension system, and braking. Also, familiarize yourself with how the vehicle responds under a variety of conditions, including when climbing hills, turning corners, and following vigorous braking. Does the engine have enough power under tough conditions? Finally, how does the transmission behave?

Keep the audio system off while driving. Instead, listen for odd sounds, such as too much wind noise entering the cabin or an exhaust system that's too loud for your tastes. Once done driving, familiarize yourself with the working of the infotainment and navigation systems, safety features, and in-cabin controls such as heated and cooled seats, climate control, or a heated steering wheel. Likewise, your salesperson can review these features with you.

Finally, test drive several models on the same day, if possible. That way, you can compare them to reach an informed decision.

Insurance, Once Purchased

Finalize your purchase decision, then complete your paperwork. One step in the process is notifying your insurer. In the majority of cases, your current insurance will cover the vehicle once you drive away from the dealership, but not always. In any case, the dealer will want to see proof of insurance.

For example, it isn't sufficient if your current coverage doesn't include liability or physical damage protection. Therefore, verify coverage with your insurer to close the exposure differences and increase the liability insurance if there is a lienholder. Finally, purchase gap insurance that pays the disparity between what you owe on the vehicle and the vehicle's actual value if it's totaled.

New Car Ownership

In summation, you are covered by the dealer's insurance if you test drive a new vehicle. That element remains an important part of the car shopping experience, enabling you to evaluate and purchase a new vehicle.

This site is for educational purposes only. The third parties listed are not affiliated with Capital One and are solely responsible for their opinions, products and services. Capital One does not provide, endorse or guarantee any third-party product, service, information or recommendation listed above. The information presented in this article is believed to be accurate at the time of publication, but is subject to change. The images shown are for illustration purposes only and may not be an exact representation of the product. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
author photo
Matt Keegan
Matt Keegan is a lifelong car enthusiast, having “driven” his first real car at the tender age of five while sitting on his father’s lap. As soon as he acquired his license, he began exploring the open road and tinkering under the hood to fix the inevitable leaky radiator, broken belt, or mess with a stuck fan clutch. It is those experiences that convinced him to stick with writing and make good friends with mechanics. Matt regularly reviews new vehicles, advises friends and families on their next car purchase, and keeps his pulse on the automotive industry. His bucket list drive is navigating Alaska’s Dalton Highway and finishing that trip with a dip in the Arctic Ocean. In July, of course.