Insurance When Test Driving a Car: What You Should Know

June 13, 2024

The excitement of heading to a car dealership for a new vehicle often leads to the pivotal decision of a test drive. However, potential buyers are frequently concerned about the insurance requirements for such an event.

Do You Need Insurance to Test Drive a Car?

One of the most common concerns when considering a test drive is the need for insurance coverage. Different scenarios can manifest depending on whether you are test-driving at a dealership or a private sale.

Test Driving at the Dealership

Insurance Requirements

Without Personal Insurance

Dealerships are legally required to insure their cars. This means that the dealership’s insurance covers any damage that occurs during the test drive.

With Personal Insurance

Even if you have personal insurance, the dealership’s coverage primarily protects the vehicle. However, having personal car insurance is wise because dealerships might hold you liable in specific scenarios.

Liability for Damages

General Coverage

Typically, the dealership’s insurance policy stays with the car, covering any accident during a test drive. However, there are exceptions where you might be held liable for damages.


If an accident is deemed to be due to reckless driving or preventable, the dealership might hold you liable for the damages. In such cases, the dealership might subrogate and try to collect from your insurer.

"Nissan 370Z NISMO - Test Drive" by David Villarreal Fernández is licensed under CC BY-SA 2.0. To view a copy of this license, visit

Signing Waivers

Some dealerships might require you to sign a “loaner/demo” agreement. These agreements could hold you liable for any damages incurred during the test drive if signed. It’s therefore advisable to check with your personal insurance agent for specifics on coverage during such test drives.

Test Driving a Private Sale Car

Private Party Sales

When test-driving a car in a private sale, ensure that the vehicle is covered by personal auto insurance. It's also a good idea to confirm coverage with the seller's agent and ask the owner to sign a statement regarding permission and insurance coverage.

Variation in Insurance Policies

Insurance coverage can vary significantly between dealerships and private sellers. It’s always essential to discuss insurance specifics with the salesperson and determine coverage details with your insurance agent.

Requirements for Test Driving

Usually, a valid driver’s license is required for test drives. Policy requirements can, however, vary depending on the state and dealership.

"Nissan 370Z NISMO - Test Drive" by David Villarreal Fernández is licensed under CC BY-SA 2.0. To view a copy of this license, visit

Safety Tips for Test Driving

When test driving a car, handle the vehicle with care and caution. Familiarize yourself with the car’s settings, including mirrors, pedals, and controls. Maintain safe distances from other vehicles, and avoid distractions such as adjusting the radio.

Buying a Car

Do not rush through the process of buying a car. Conduct test drives of multiple vehicles and ensure that you're prepared with the necessary documents and checklists when making a purchase.

Post-Purchase Advice

After purchasing a vehicle, connect with an insurance agent to ensure continuous coverage for your new car.


Thoroughness and caution are imperative during test drives. Being informed about insurance coverage, whether at a dealership or from a private seller, is crucial for a smooth car buying and test-driving experience. Always consult with your insurance agent to get the best possible advice and coverage.

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