Finding the right vehicle is much trickier than you'd expect, particularly if you're a new or inexperienced driver. There are a plethora of tasks that you need to take care of before you hit the road, some of which include:

• Getting your driver's license
• Setting a budget
• Researching brands and models

However, many new drivers tend to gloss over the overall importance of auto insurance in Canada.

Our team receives a wide variety of questions about auto insurance regularly; however, one of the most interesting queries that we've been asked is, "do I need insurance to test drive a car in Canada?". 

Learning the answer to this question can give you confidence behind the wheel and make the car buying process much less stressful.

What is a test drive?

Before we dive into the topic, let's briefly go over the basics.

As the name implies, test driving is the act of getting behind the wheel of a vehicle before committing to a purchase (or lease). Doing this gives drivers a chance to assess the quality and "feel" of the car.

Most often, test drives are free of charge; because of this, you have the freedom to test as many vehicles as you'd like without worrying about spending a small fortune.

While taking a test drive in Canada, drivers are generally accompanied by a salesperson or dealership representative. Car dealerships do this to minimize the chances of theft or vandalism.

Can you test drive a car without insurance at a dealership?

This is a complex question, as the answer isn't as straightforward as it may appear.

Technically, yes, you can test drive a car without auto insurance (at a dealership) in most cases. Generally, you only need to have your driver's license to test drive a vehicle at a car dealership.

However, even though you can test drive a car without insurance, you should be aware that you may not be eligible for coverage in the event of a collision.

When are you covered in the event of an accident?

In Canada, car dealerships are required to obtain specific types of insurance. In this case, we'll focus on garage and fleet coverage. This type of coverage acts as a form of liability insurance for car dealers. Garage and fleet coverage is required by law in Canada.

This means that if you accidentally injure or kill someone while test driving a vehicle, you'll likely be protected by the dealership's car test drive insurance coverage.

When aren't you covered in the event of an accident?

Unfortunately, there are some cases where the car dealership's insurance may not cover drivers.

Car dealerships have the choice to purchase what is referred to as physical damage insurance. As the name implies, this variety of insurance covers physical damage sustained by a vehicle in the event of a collision.

However, unlike garage and fleet insurance, car dealerships don't need to purchase physical damage coverage. This type of insurance covers minor and major physical damage that is sustained from a collision. 

If the dealership doesn’t have this coverage, then drivers are left financially responsible for incidents that occur during a test drive.

For instance, if you get t-boned during a test drive, but the dealership doesn't have sufficient physical damage coverage, you'll likely have to pay for the expenses out of pocket.

Because of this, we highly recommend inquiring about auto insurance coverage with the salesperson before getting behind the wheel of a test vehicle. Having a quick conversation could help you save you hundreds or thousands of dollars in the event of a collision.

Bonus tip - Grace period

If you've recently purchased a new car but don't have your new auto insurance policy sorted out, you should know that you have a 14 day grace period. During this time, drivers have a chance to transition their current policy onto their new vehicle.

If you're planning on driving during the grace period, you should know that you need to have copies of your sale confirmation and proof of your existing policy. Failing to have these documents on hand can lead to a significant fine or a violation.

Are you allowed to test drive a vehicle without insurance when buying from a private seller?

In most cases, drivers aren't required to have insurance if they are purchasing from a private seller. This is due to the fact that the seller is still classified as the "owner" of the vehicle, thus, is responsible for having valid insurance.

In the event of an accident during a test drive, the buyer (driver) would be seen as an incidental driver. This gives the driver a layer of protection in the event of an accident that results in physical damage.

If you have any unanswered questions about test driving a car without auto insurance, be sure to reach out to your car insurance provider. Your insurance provider has the expertise and experience to address any of your concerns swiftly.

Do you need insurance to purchase a vehicle in Canada?

This is another interesting question that doesn't necessarily have a black-and-white answer.

Technically, yes, you can purchase a vehicle without insurance. All you need is the appropriate funds and a valid driver's license.

However, although you can buy a vehicle without auto coverage, it’s illegal to drive a car without insurance in Canada. This means that you can't legally drive your new ride out of the parking lot. Because of this, it's incredibly uncommon for drivers to purchase a car without valid auto insurance. 

Car insurance for test drive — what have you learned?

As you now know, just because you have the ability to test drive a vehicle without insurance doesn't mean that it's wise. We urge individuals that don't have auto insurance not to get behind the wheel unless the dealership or private seller has the appropriate coverage.

If you have insurance, we still suggest that you ask the dealership or private seller about their insurance status. Doing this can minimize the chance of you making a mistake that you regret in the near future.