Test Driving and Insurance Issues with Progressive Auto Insurance
Recently, while test-driving a Tesla, I was rear-ended by another driver while waiting at a red light. Although the damage was minor, the accident was deemed entirely the other driver’s fault by the police. Since I have Progressive Insurance, I promptly reported the incident to them. At first, I was informed that the dealership’s insurance would cover the damages, and if they didn’t, my own policy would take care of it. Living in Michigan, a no-fault state, I assumed that each driver’s insurance would cover any damages, regardless of who was at fault.
However, a few weeks later, I received a notification from Progressive stating that my policy includes an exclusion for damages to vehicles that are “being sold or offered for sale by a person while engaged in any auto business.” According to their definition, “auto business” includes selling, leasing, repairing, parking, storing, servicing, delivering, or testing vehicles.
The dealership is now claiming they aren’t responsible for filing a claim with their insurance due to the terms of their test drive agreement. This leaves me in a difficult position, as it seems I may have to cover the costs for the damages to the test drive vehicle, despite the accident being someone else’s fault and contrary to what my insurer initially communicated.
Is this truly how auto policies work? With so many people test-driving vehicles regularly, it appears that many could potentially be driving without adequate insurance coverage. Are these test drive agreements enforceable? Is this a specific issue with Progressive, or could it affect other insurers as well? What options do I have moving forward?
It sounds like you’re in a frustrating situation, and your concerns are valid. Here are a few points to consider regarding your case:
Insurance Exclusions: Progressive’s exclusion regarding “vehicles while being sold or offered for sale” is not unique to them; many insurance companies have similar clauses. The reasoning behind this is that the vehicle is technically under the dealer’s ownership and liability during the test drive, and they should be responsible for it.
Dealership’s Liability: If the dealership’s test drive agreement specifies that the customer takes on certain liabilities, it may complicate matters. However, many dealerships will still have general liability insurance that should cover incidents during test drives. It would be worth pushing back with the dealership and asking them to file the claim with their insurer.
No-Fault State Considerations: While Michigan is a no-fault state, meaning you can seek damages through your own policy regardless of fault, there could be limitations based on the vehicle’s status at the time of the accident. Because the vehicle was not owned by you, it may limit the application of your coverage.
Recourse Options: If Progressive is denying coverage based on the exclusion, and the dealership isn’t stepping up, you might consider:
File a complaint with your state’s insurance commissioner: They might help mediate issues with your insurance company.
Test Drive Agreements: While these agreements are common, they must still conform to state laws. You may want to consult with a legal professional regarding the enforceability of such agreements in Michigan.
In summary, while it’s unfortunate that you find yourself caught in this situation, exploring all possible avenues—including further discussions with both your insurer and the dealership—will be your best course of action.