Georgia Legal Guide: Who Pays When a Car Dealership Vehicle Causes Your Accident?

Key Points:

• Georgia law protects car dealers from primary liability. The test drivers insurance will be liable for the accident.  
• Test drive cars, loaners, and service vehicles are covered by personal insurance in any situation where a non-employee is driving. 
• If the person test driving the vehicle has no insurance then the dealership’s insurance must pay first. 
• When car dealer employees or owners drive dealer cars, the dealership’s insurance remains primary. 

Can I Sue the Dealership if I Was Injured by Someone Driving a Dealer Car? 

If you or someone you know has been hurt in an accident involving someone driving a car from a dealership, whether you can hold the car dealer responsible for your injuries depends on who was driving and if they had insurance. Georgia law has special rules that can dramatically change who pays when dealership vehicles are involved in accidents.  

Normally, car insurance “follows the car” – meaning the insurance on the vehicle involved in the accident pays first. However, Georgia lawmakers realized that this would be unfair to car dealerships, which would otherwise have to provide primary insurance coverage for every customer whom test drives a car or borrows a loaner vehicle. 

Under Georgia law (O.C.G.A. § 33-34-3(d)), when someone who is not an owner or employee of the dealership is driving one of their cars, that driver’s personal insurance becomes primary, and the dealership’s insurance only provides backup coverage. 

What Georgia law O.C.G.A. § 33-34-3(d) covers: 

Georgia’s law applies to various scenarios involving dealership vehicles: 

• Test drives by potential customers, 
• Loaner cars given to service customers, 
• Delivery vehicles driven by non-employees, and 
• Personal errands by customers using dealer cars. 

A Hypothetical Example: David’s Test Drive Incident 

David walked into East Point Honda looking for a new Accord for his daughter who was starting college. The salesman, eager to make a sale, handed David the keys to a brand-new Accord and said, “Take it for a spin around the block.”  

While test driving the Honda, David got distracted by the car’s fancy dashboard display and rear-ended Lisa’s SUV at a red light. Lisa suffered neck injuries and her vehicle sustained $30,000 in damage. Her medical bills totaled $45,000. 

Here’s how Georgia law determines who pays: 

David’s personal car insurance pays first (up to his policy limit, which is $50,000). Even though he was driving East Point Honda’s car, his personal insurance is considered “primary coverage.” 

East Point Honda’s dealership insurance pays second (in this case, the remaining $25,000 of Lisa’s damages and medical bills). Their insurance only kicks in after David’s personal coverage is used up. This is called “excess” or “secondary” coverage. 

An important exception is that if David had no car insurance at all, then East Point Honda’s insurance would have to pay first as the primary coverage. 

Applying learnings from David’s case to your accident: 

There are several key takeaways from this example that you can apply to your own dealer car accident: 

• Personal and dealership insurance apply. Depending on the damages in your accident, you may access your personal insurance and the dealership’s commercial coverage, which is often much higher than typical personal policies. 
• Properly investigating your accident and reviewing documentation is crucial. In order to determine which insurance pays first, you need to know whether the driver was a customer, employee, or owner. 
• If you don’t have insurance, the dealer is liable. 

When is a Dealership Responsible for a Car Accident? 

The dealership’s insurance pays first in the following situations: 

• When a dealership employee, such as a salesperson, mechanic, or manager was driving, 
• If the owner of a dealership was driving, and 
• When the driver doesn’t have personal car insurance (though the dealership should have verified insurance before allowing the test drive). 

What You Should Do After a Dealership Vehicle Accident 

1. Identify your relationship to the dealership. Are you an employee, customer, or the owner? 
2. Ensure you have insurance information for both the driver and dealership. 
3. Document the purpose of your  trip. Was it a test drive, a loaner while getting repairs, or being used for delivery? 
4. If you’re just a customer, don’t let the dealership claim no responsibility. They still owe you excess coverage in most cases. 
5. Contact an experienced attorney to help you navigate the complexities of dealership cases.