Progressive Auto Insurance Test Drive Exclusion?
I recently experienced an incident while test driving a new Tesla. While stopped at a red light, another driver rear-ended me, causing minor damage to the rear bumper of the vehicle I was test driving. The police were called, and they determined that the other driver was completely at fault. I have a policy with Progressive Insurance and promptly reported the accident. They informed me that the dealership’s insurance would cover the damages, and if that didn’t happen, my own policy would come into play. Since I live in Michigan, a no-fault state, I believed that each driver’s insurance would cover damage to their vehicle, regardless of fault.
A few weeks later, I received a notification from Progressive indicating that there’s an exclusion in their policy that states they aren’t liable for damages to any vehicle being sold or offered for sale by someone engaged in “auto business.” The term “auto business” includes selling, leasing, repairing, parking, storing, servicing, delivering, or testing vehicles.
The dealership is now claiming they aren’t liable for filing an insurance claim because their test drive agreement indicates that. This means I might be responsible for covering the damages to the test drive vehicle, despite the accident not being my fault and contrary to what my insurer initially told me.
Is this truly how auto policies function? Test drive agreements are quite common today, but if this is the case, many people might be test driving vehicles without any insurance coverage. Are these agreements legally enforceable? Is this a unique issue with Progressive? What options do I have here?
I’m sorry to hear about your unfortunate experience during the test drive. It sounds quite stressful, and I can understand your concerns regarding insurance coverage and liability.
From what you’ve described, it seems like you’ve encountered a common issue related to test drives and the insurance policies surrounding them. Here’s a breakdown of some key points to consider:
Insurance Policy Exclusions: Many auto insurance policies, including Progressive’s, often contain exclusions for vehicles being sold or offered for sale (like those in test drive situations). This means that if you’re in an accident while driving such a vehicle, your personal auto insurance may not cover damages, leaving you to rely on the dealership’s policy.
Dealership’s Insurance: In most cases, dealerships have their own insurance that covers vehicles during test drives, but the specifics can vary. The dealership’s test drive agreement likely aims to limit their liability, but their insurance might still be responsible for covering any damage during the test drive.
Involvement of No-Fault Laws: Living in a no-fault state (like Michigan), generally means that drivers rely on their own insurance to cover damages, irrespective of fault. However, this rule may become complex when dealing with vehicles that are not owned by you, such as a test drive.
Recourse and Recommendations:
Legal Advice: If you’re facing resistance from the dealership or Progressive regarding coverage, it may be prudent to seek legal advice. An attorney specializing in insurance or auto accidents could provide guidance tailored to your situation.
Future Considerations: As you mentioned, this scenario seems to affect many people test driving vehicles. It may be worth advocating for clearer perception and responsibility in such agreements, as ambiguity can lead to situations like yours.
It’s a challenging situation, but staying proactive in seeking clarification and potential recourse will hopefully lead to a resolution.