You’ve been there. The salesperson is in the passenger seat, tapping the dashboard, whispering that you’re not really feeling the torque or the handling. “Open it up a little more,” they say. “Find out what this thing can really do.”
It feels like a challenge. It’s actually a calculated risk.
If you spin out on the way back, your personal auto policy might not be the first line of defense. State laws vary wildly on this. Jeff Willoughby, director of large accounts at Sentry Insurance, notes that liability depends on whether your coverage is primary or if the dealership’s is. In some jurisdictions, the customer’s insurance steps up immediately. In others, it doesn’t matter.
Accidents during test drives are rare but messy. No one tracks the exact ratio of test drives to collisions, but when a crash happens, it’s significant.
“A collision on the car is normally covered by the company that is handling inventory for the dealership.”
Dealerships don’t insure every single vehicle individually. That would be a logistical nightmare given daily inventory changes. Instead, they buy a blanket policy. This coverage protects the entire lot. If you total a Camry on a Sunday afternoon, the dealer’s inventory insurance pays for the repair, not yours.
The cost to keep that coverage varies. A single-point dealership in an average town might spend $40,000 to $60,000 annually. Large networks spend up to millions. This policy covers everything on the lot, not just cars out for test drives.
Driver’s License Please!
Dealerships are minimizing risk. They aren’t just handing keys to anyone who walks through the door. The salesperson is assessing you. Are you a buyer? Are you steady?
They will photocopy your driver’s license. That’s standard. They rarely ask for your insurance card. If you’re buying your first car and don’t have coverage yet, that’s fine. The dealer’s insurance handles the gap.
“As far as getting an insurance card from [the customer], they don’t necessarily ask for that.”
There are strict protocols for the drive itself. The salesperson must accompany you. You’ll likely be on a predetermined route designed to minimize exposure. Expect mostly right-hand turns. Left turns introduce more risk, so dealerships avoid them during test drives.
Some dealers let you take the car home overnight. Insurers hate this. If you crash it while parked at your house, the scenario gets complicated quickly. It’s generally discouraged.
Dealers can refuse test drives. Common reasons:
- No driver’s license.
- Signs of intoxication.
- Rare or unusual vehicles.
- High-performance models.
Want to blast a limited-edition Ford Mustang Shelby GT500 or a Porsche 911 Turbo? The sales team will be wary.
“That’s at the dealership’s discretion. Every dealer kind of makes their own call on that. Most dealers aren’t going to let those specialty cars out of their sight.”
Testing Limits
What happens if you get a speeding ticket on a test drive? You usually have two choices: pay it or fight it.
Jean-Marc Gales, CEO of Lotus, proved there’s a third option. In January 2018, he was caught doing 102 mph in a 70 mph zone near Norwich, England. He already had a history of moving violations.
Gales told the court he was testing one of Lotus’s newest cars. He got a pass.
Most of us won’t get that luxury. But knowing who holds the insurance bag changes the stakes. You’re not just driving a car. You’re driving someone else’s inventory. Drive accordingly.
