You are on a car lot and choose a car to test drive. You pull out into traffic and—wham! An accident! What now? Are you responsible for the damage to the car? Doesn’t the car lot have insurance on its vehicles?
Who pays the deductible for this claim? These are all questions which may occur to you after such an incident, and it is important to know the right answers.
Otherwise, you might be stuck with paying bills which are not rightfully yours, or believe you are exempt from paying damages you actually owe.
Car lots do carry insurance on their vehicles. In most cases, this insurance covers anyone who drives the car, so a “test-driver” would automatically be covered.
However, if the test driver caused the accident, the liability scenario may change. Further, if someone else caused the accident, it is possible that their insurance will be responsible for the damages to the vehicle, as well as paying your medical expenses.
One other variable is whether the state you are in is a liability or no-fault state. In order to understand how each of these factors affects the outcome of this situation, let us look at them individually.
First, think about a scenario where you are not at fault in the accident, and where you live in a liability state. Suppose, for example, you are test driving a car in Georgia and someone rear-ends you, causing damage to the vehicle and causing you to have whiplash.
In this case, the other person’s insurance policy would have to pay not only for the damages to the vehicle, but also the medical expenses you incurred.
However, if this same accident happened in a no-fault state, such as Michigan, then the at-fault driver’s insurance would only pay for damages to his vehicle and his medical bills. The dealership’s insurance would be required to pay for your expenses and the damage to the car.
The dealership could also try to “subrogate,” or claim against your personal insurance policy, to recover their deductible, and their insurance company could attempt to get your insurer to reimburse them for the cost of the damages. Of course, this would be between the companies and you would not be charged any money.
What about a scenario where you were at fault? If you live in a liability state, depending on the laws of that state, your insurance policy or the dealer’s would have to pay for the damages to both the car you were driving and the victim’s car.
Further, if the dealership’s insurance did pay, it could attempt to collect from you or your insurance company for the amount expended. Normally, drivers who hold a liability policy are covered by that policy for any car they drive, so your insurance would likely pick up the claim, even though you did not own the car in question.
In a no-fault state, your no-fault policy would pay for your damages but not the other person’s. In this case, the victim’s no-fault policy would pay his damages.
If you did not have no-fault insurance, the dealership’s insurer would be forced to pay, and might try to collect the amount from you.
In most cases, dealerships carry sufficient insurance to allow them to make a quick claim for damages against their own policy, and will not try to collect from a test driver.
However, if you are liable for the accident, the dealership has the right to attempt to collect the deductible they paid as well as the damages from you or your insurance company.
If the accident was a serious one, with severe injuries or loss of life, it is more likely the insurance companies and individuals involved would attempt to subrogate or would file suit against the at-fault driver for the damages, which might exceed policy limits.