Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Share on twitter
Share on facebook
Share on linkedin

Test Driving a Car — Are You Covered in Case of a Car Accident?

Share on twitter
Share on facebook
Share on linkedin
Share on email

Test Driving a Car — Are You Covered in Case of a Car Accident?

By:

Posted September 24, 2018

If you are looking to buy a car, you will probably do some preliminary research on what type of vehicle is best suited to you and then take a test drive. Not all test drives are without incident. What happens if you get into a minor accident? Or if someone is seriously injured in a collision? Who covers the cost of repairing any damage to the vehicle or pays the claims of any people who are hurt? What if you caused the accident and do not have your own policy of auto insurance?

Dealership Insurance Coverage

In the case of an accident during a test drive, the car dealer bears the responsibility for any physical damage done to its vehicle. As the owner, the dealer is the party with interest in the vehicle, not you as the test driver. If you lend someone your car, you’re lending them your insurance too (please see our earlier blog on vicarious liability).  This means that the dealer’s insurance would be responsible for the cost of any physical damage to the vehicle caused during the test drive.

This test drive insurance is part of the Ontario Garage Automobile Policy approved by the Superintendent of Financial Services. This Policy provides coverage for many parts of a dealership’s business and operations — including dealer vehicles and customers’ vehicles while being serviced.

It is a Statutory Condition of garage policies that the insured shall not “permit any other person to drive or operate the automobile unless the Insured or other person is authorized by law to drive or operate it.” According to recent research, only about 80% of dealerships require a person going for a test drive to show they have a valid licence. The absence of a valid permit could mean no insurance coverage if there is an accident.

Ontario’s Statutory Accident Benefits Schedule

Dealerships must also have insurance coverage for Statutory Accident Benefits if a driver (or another person involved in an accident with the vehicle) is injured during a test drive, even if that driver is at fault. However, if the test driver has their own auto policy, Statutory Accident Benefits would be paid by that insurer. If the test driver was uninsured at the time of the accident, the dealership’s insurance would pay out any Statutory Accident Benefits.

Liability Waivers

Some dealerships try to minimize their risk and eliminate their responsibility by asking test drivers to sign waivers acknowledging that the test driver accepts responsibility for any damage that occurs during the test drive. Other dealerships feel these waivers discourage people from taking a test drive and this means fewer sales. Overall test drive waivers are not common in Ontario. In the absence of an industry standard, each dealership that asks test drivers to sign a waiver will provide documents with its own wording.

Courts generally frown upon liability waivers but sometimes do find waivers valid and enforceable. Any challenge to the validity of a liability waiver requires a careful analysis of the particular wording used and the circumstances under which it was signed. As a general practice, you should not sign a liability waiver unless you are comfortable assuming the risks involved with the particular activity. When it comes to test drive waivers, ask yourself this question: why would I sign a liability waiver just to take a test drive when I can probably find another dealership that does not require a waiver and offers the same vehicle?

This blog post was written by Edward (Ted) Masters, a member of the Disability Insurance Claims and Personal Injury teams. He can be reached at 613-566-2064 or at ted.masters@mannlawyers.com.

More Resources

Blog |
Employment, Labour, and Human Rights

By: 

Generally, the Employment Standards Act, 2000 (“ESA”) has been interpreted to protect non-unionized employees from “temporary” lay offs unless their employment contract permits such a[...]
Blog |
Business Law

By: 

Posted October 20, 2021

On October 19, 2021, the new Ontario Business Registry System launched. This new online registry now enables businesses and not-for-profit corporations to directly access services[...]
Blog |
Environmental Law

By: 

Posted October 14, 2021

In the decision of Greenpeace Canada (2471256 Canada Inc. v. Ontario (Minister of the Environment, Conservation and Parks), 2021 ONSC 4521, released September 3, 2021,[...]
Blog |
Employment, Labour, and Human Rights

By: 

Posted October 1, 2021

This blog continues our exploration of the potential employment law consequences stemming from the degree of control a party exerts within a variety of business[...]
Blog |
Personal Injury

By: 

Posted September 27, 2021

Personal Injury lawyers and their clients are all too familiar with the carnage and suffering caused by impaired drivers.  Canada has the worst rate of[...]
Blog |
Bankruptcy and Insolvency, Business Law

By: 

Posted September 24, 2021

As is noted by the Court of Appeal in McEwen (Re), released August 12, 2021, referred to here as “Traders”, the BIA is a complete[...]

Subscribe to Our Newsletter

Name*
Consent*
This field is for validation purposes and should be left unchanged.