Test Drive Procedures and Best Practices
When a vehicle is sold, and all the paperwork completed, liability for accidents shifts solely to the buyer. In a test-drive situation, however, the dealer still has ownership and control of the vehicle, and there is the potential for significant liability exposure for an accident caused by the test driver if their personal auto policy denies coverage or has lapsed.
Best Practices for Test Drive AgreementsAlways have the potential buyer fill out and sign a test-drive agreement (Burrell Printing has a test-drive form #24-036, as do some dealer management software programs). While the agreement won't prevent a third party from making an insurance claim against or suing the dealer, it does set forth specific limits and duties to which the customer agrees. The agreement could provide evidence of due diligence by the dealer if an incident does occur.
Having a written test-drive agreement could also help if a vehicle is stolen. Some police departments won't take a stolen report on a test-drive vehicle until after a certain period of time (such as 24 hours). A better case can be made that the vehicle was stolen if not returned in a reasonable time by having a specified return time.
Check the driver's licenses of all potential test drivers and be careful about out-of-state, out-of-country, temporary, or expired licenses. A suspended license should be a red flag and may indicate a recent conviction of driving under the influence. Any person driving a vehicle without a driver's license is presumed by law to be an unsafe driver. Thus, a dealer could be considered to be negligent in placing a vehicle in the control of an unsafe driver. Copies should be made of all driver's licenses and insurance certificates prior to test drives. Again, the lack of an insurance card or electronic pdf should be a red flag.
While a dealer's garage liability policy would usually cover test drives, many policies disclaim liability for incidents caused by unlicensed test drivers. Thus, dealers should check their garage liability policies to establish rules for test drives.
Compliance with state laws such as child restraint requirements should be insisted upon. Regarding children in the car, some dealers might want to avoid the situation whenever possible. Ann Mullen, of Mullen Insurance Agency, shared a suggestion for dealers. "I advise dealers that, if a customer needs to bring along a child, the test drive must be accompanied by a salesman," Mullen said. "Unaccompanied test drives with children in the car would never be a good idea. And it's always important to make sure you record the customer's license and insurance cards to ensure they are valid before a test drive takes place."
Based on information previously submitted by Mike Dunagan, Jameson and Dunagan, Dallas, Texas.