In general, insurance follows the car, so the dealership or, for a private sale, the owner should have insurance that covers you. However, you'll want to look out for a few gotchas to make sure you are in fact covered.

If I'm test driving a car at a dealership, whose insurance covers me?

Dealers are required to carry liability insurance for test drives in the vehicles they offer for sale. They usually also have physical damage coverage, which pays to fix their cars if they are damaged during a test drive.

However, like your own insurance, when dealers report lots of claims to their insurance company their insurance prices increase. And since auto dealers' policies are expensive, they have an incentive to keep the number of claims down. This is why they may ask you to sign a waiver of coverage before you test drive a car.

Read the document carefully because if you sign it you may be accepting liability for any crash you cause while you are test driving. That means the dealer's insurance won't pay, and the claim will be made against your insurance, or if you don't have insurance yet, you.

Signing a waiver like this is generally not a good idea for you. But, if the dealership won't back down on it and you still want to test drive their car, give your insurance agent a call to make sure you'll be covered. And ask your agent and the dealership (and read the legal language in the waiver!) if you are accepting responsibility for your liability in an accident and damage to the car, or just liability.

If you don't have car insurance, you can buy a non owner auto policy. This kind of car insurance will cover your liability when you drive a car you don't have regular access to. Be aware that it does not cover damage to the car, though. You can add your new car to non owner auto, which turns it into a normal car insurance policy and lets you add coverage for the car.

One last thing to be aware of is that if you are at fault in an accident in a dealership's vehicle, they may be able to come after you for damages to their car, depending on the situation. Make sure you are careful not to speed and to follow all traffic laws carefully (no rolling stops!) to help reduce this possibility.

If I test drive a privately owned vehicle, whose insurance covers me?

The car owner's insurance policy should cover you under what's called "permissive use". Here are the key questions you need to ask to make sure you're covered:

• Do you have valid car insurance?
  You may want to ask to talk to their agent or see the policy or insurance card.
• How much liability coverage do you have?
  Your financial situation may differ from the seller's. Do they have enough coverage to protect you if you get in an accident in their car and are sued?
• Do you have collision coverage on the car?
  If they don't, and you crash the car, their insurance won't cover it and they'll be looking to you to pay for the damage.

Your own car insurance may offer some benefits after the car owner's policy pays out (or if their insurance is not in force). Check with your agent to understand how your own coverages apply.

Conclusion

You should be covered by the owner's insurance policy, regardless of whether you're at a dealership or negotiating a private sale, but you will want to ask a few questions to make sure that's the case.

For more information, check out our articles:

• Why you shouldn't buy insurance from the dealership's agent.
• Our complete guide to car insurance for first time car buyers.
• Do you need car insurance to test drive a car.