When you bring your car into your dealership for routine maintenance or repair, it’s possible that a service department employee will take your car for a test drive before you pick it up.
But what happens if the test drive goes awry and your car winds up in a collision? Or if said dealership employee gets caught speeding? Will your auto insurance cover this? And how might it impact your premium?
We break down the different scenarios for dealership-related accidents and how they affect your insurance.
When it’s not the dealership employee’s fault
If a dealership employee is out test driving your car and they get into an accident that’s not their fault, such as being rear-ended, then your insurance company won’t be responsible for paying out damages to the other driver(s), and your insurance premium won’t be affected.
Though insurance providers will usually cover the damages for this type of accident, your province of residence determines how that will happen, says Anne Marie Thomas, director of consumer and industry relations at the Insurance Bureau of Canada.
Ontario, Quebec, Nova Scotia, New Brunswick, and Prince Edward Island are provinces with a “no-fault” auto insurance model. This means that all drivers involved in a collision contact their respective insurance companies to make a claim and receive damages — even if they didn’t cause the crash.
The insurance provider provides coverage to the policyholder and then determines how much fault they should be assigned. In Ontario, if you’re determined to be anywhere from 0% to 25% at fault for the accident, an at-fault collision will be listed on your driving record but your premium shouldn't increase. If you’re found to be 25% or more at fault for the accident, you could see an increase in your premium come renewal time.
When it is the dealership employee’s fault
When the dealership employee is responsible for an accident while behind your wheel, there are a few moving parts to consider.
In this case, Thomas says that the dealership should be the one to pay for the accident, and that most dealerships have commercial insurance that covers this type of scenario.
You should report the accident to your insurance provider, and it will work out how best to resolve the damages. Your insurance policy would respond, but the dealership’s commercial insurance policy will ultimately be responsible for reimbursing your carrier — which could mean settling the cost of the damage outside of a claim.
As long as there’s proof that the damage occurred while the dealership was in possession of your vehicle, your premium won’t be affected. Similarly, if a dealership employee is pulled over while driving your vehicle for something like speeding, and receives a ticket from the police, this would not affect your insurance premium since you weren’t the one behind the wheel. The ticket would go on the dealership employee’s driving record, not yours.
How to protect against possible dealership damage
A dealership is required to obtain your consent before driving your vehicle, Thomas says. A dealership’s work order often contains this consent agreement. Read that part of the work order carefully and see if it says anything about what happens if there’s an accident with your car. If not, ask the dealership about this.
Not all dealerships hand out work orders every time you bring your vehicle in, and it’s somewhat implied that someone may test drive the vehicle before returning it to you.
“I would assume that every single time I take my car in for a repair, I would hope they’ve driven it before I do,” Thomas says.
Asking your dealership about what happens if there’s an accident while the vehicle is in its possession is always a good idea. Thomas also recommends drivers invest in collision insurance to protect against at-fault accidents. It’s some extra money but could save you a lot in the long run. While it’s rare for something to happen to your vehicle while it’s in a dealership’s care, knowing how to deal with the worst-case scenario is always reassuring.
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