Car dealerships can’t let you leave with your newly purchased vehicle until you have proof of auto insurance coverage. But you can’t get a quote until you know the exact car you’re getting. So, you need to get insurance to drive your new car home. Do you have to sign up for a six-month or year-long insurance policy at the dealership? Is there another option, like short term car insurance? And is there some kind of temporary coverage for test drives, or do you need non-owned car insurance for that?
What kind of insurance coverage do car dealerships offer?
Car dealerships don’t directly sell insurance, but they can help you with insurance in two ways.
Firstly, when you test drive a car, car dealerships should have you covered. Dealerships buy their own commercial auto insurance coverage, which covers potential customers doing a test drive. Some dealerships will try to pass financial responsibility for accidents back to you by asking you to sign a waiver. Read any waiver very carefully if you do consider signing and remember that you can always walk away and choose another dealer instead of signing.
Secondly, car dealerships often partner with an insurance agency. The insurance agency offers coverage for you to buy so you can legally drive your new car away. You do not have to buy your insurance from the dealer’s preferred insurance agency, and you may get a better deal shopping elsewhere in advance, even if you haven’t yet decided on which car you are going to buy.
Can you buy a car insurance policy from a dealership?
Car dealerships don’t sell insurance themselves, but they may have an insurance agent partner onsite who can sell you a policy. While you can buy an insurance policy for your new car at the dealership, it’s not necessarily a good idea. You could wind up paying more than you would otherwise.
A smarter move would be to get quotes from an insurance agency before you start going for test drives. Even if you don’t know the exact car you’re getting, you can lock in a quote for the car you think you’ll get. Getting a quote ahead of time can net you an early shopper discount of up to 10 percent. Shopping in advance makes you look more responsible to insurance companies, so they might offer you a better rate.
Will my car insurance policy cover me when I test drive?
Whose insurance covers a test drive: your existing car insurance policy or the dealership’s? Both. Car dealerships carry liability insurance to protect them, and you, if you cause an accident while test-driving a car. They usually also get coverage for physical damage to fix car damage from test drives.
However, the dealership may ask you to sign a waiver of coverage before a test drive. Dealerships want to keep their insurance claims low, since more claims make their premiums go up. They hope you’ll waive their coverage and use your own.
See if you can get the dealership to let you go for a test drive without signing the waiver. If they refuse, call your own insurance company to confirm that they cover you during a test drive. Standard auto insurance usually covers your liability for accidents during a test drive. Non-owned car insurance will also cover your liability, since that policy type is meant to cover you while driving cars you don’t own. Note that there is often no coverage for the dealer’s vehicle under your own policy. Check with your insurance company and double check with the dealer to make sure there is coverage under the dealer’s policy.
Can I get short term car insurance from the dealership? Should I?
It’s best to plan ahead. If possible, use an independent insurance agency like Surround Insurance to get some quotes before you head to the dealership. Then you won’t need to buy insurance at the dealership.
If you’re already there and don’t have a quote, most dealerships have a relationship with an insurance agent who can offer you insurance. You can probably get a better deal on a longer-term car insurance policy if you shop around. And even if short term car insurance is available, it’s usually not a good deal. It’s often quite expensive on a daily basis, and you’ll still need to buy a regular car insurance policy.
And if you’re not buying a car immediately, don’t worry – you don’t need insurance just to test drive one! If you choose a certain make and model after a test drive, it’ll be easier to get a quote before you go back to the dealership to buy.