Test Driving a Car at an Auto Dealership: Whose Auto Insurance Applies?

Usually, when you test-drive a car at a dealership, the salesman asks to make a copy of your driver’s license. I don’t know about you, but I have never been asked for a copy of my auto insurance policy.  There’s a reason for that.  The reason is that the car dealer is required to have a “garage policy” on their fleet of cars that includes coverage for anyone who drives the cars with permission of the dealership.  That includes coverage for damage to the vehicle being driven, as well as liability coverage for damage caused to other people or property.  If the test-driver has an auto policy, his coverage typically provides "excess" coverage (pays for damages beyond what the dealer’s primary policy covers). This makes sense; if you think about it, many personal auto insurance policies cover other people who drive your car with your permission, making them insureds under your policy while they are driving, affording them the same coverages you would have if you were driving. Since the dealership is in the business of selling cars and in order to do so, customers must drive the cars to try them out, they are provided with coverage as “insureds” on the dealership’s policy. They have the dealership’s permission to drive.