Test-Drive Policies Can Help Protect Dealers

By Michael W. Dunagan
TIADA General Counsel

Dealer Question:  What are some major considerations for a dealer in establishing a policy for allowing customer test drives?

Response:  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 has potential liability for an accident caused by the test driver.

Here are some issues to be considered:
  1. Always have the potential buyer fill out and sign a test-drive agreement (Burrell Printing has a test-drive form, as do some dealer management software programs). While the agreement won't prevent a third party from claiming against or suing the dealer, it does set forth specific limits and duties that the customer agrees to. The agreement could provide evidence of due diligence by the dealer if an incident occurs.
  2. 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).  By having a specified return time, a better case can be made that the vehicle was stolen if not returned in a reasonable time.
  3. 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. 
  4. While a dealer's garage liability policy would usually cover test drives, many policies disclaim liability for incidents caused by unlicensed test drivers. Dealers should thus check their garage liability policies in establishing rules for test drives.
  5. Copies should be made of driver's licenses and insurance certificates prior to test drives.
  6. Compliance with state laws such as child restraint requirements should be insisted upon.
With regards to children in the car, some dealers might want to avoid the situation entirely. Kevin Smith of Tri-State Dealer Services shared a suggestion he tells his dealer clients. 

"I advise dealers, if somebody shows up with an infant or a young child, let the parents test drive the car separately," Smith said. "Maybe let the mother test drive the car with the salesman while the father stays back at the dealership with the child. Then let them switch. If they don't want to do that or there is only one parent, then DEFINITELY Make sure the child is in a restraint seat." 



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