Imaging It’s a super Saturday sale and customers are waiting in line to test drive your cars, the lot is full and your salesmen are all seeing dollar signs walking around the lot. They are trying to get customers out on the road to get them on the hook and close the deal! He takes a copy of their driver’s license and insurance card then hops in the vehicle and hand the customer the keys. Your customer suddenly accelerates in your parking lot damaging two other cars parked close by plus the one he was driving . Well at least your salesman has a copy of both the license and insurance card, that should be enough right?

Unfortunately not in Texas and most other States, if you authorize someone to drive an auto by handing them the keys, your insurance company will be required to pay for all of the damages. It almost doesn’t make sense that your insurance should be required to pay for the someone else’s damages but without transferring the “primary coverage” from their personal to cover your auto, their insurance is not required to pay. The same situation applies if a customer is requiring the use of a loaner auto for the afternoon while you complete their repair. If they don’t sign a loaner agreement that transfers their “primary coverage” to your owned auto and you hand them the keys your policy would be on the hook for any accidents the customer may have while operating your auto.

Take the time to consult with an attorney or contact your local dealer association for the latest version of a test drive or loaner agreement and you could avoid costly increases to your garage insurance and make sure the responsible party ends up paying for damages. I have heard excuses like it takes too long or customers don’t like to sign those things but with the elasticity of insurance premiums taking the time may save you thousands of dollars a year in insurance premiums.