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 who 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. 

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Frequently Asked Questions About Dealership Car Accidents

Does O.C.G.A. § 33-34-3(d) apply to both new and used car dealers?

Yes, Georgia’s statute applies to all car dealers, whether they sell new cars, used cars, or both. The law doesn’t distinguish between the type of dealership, only whether the driver is an owner, employee, or outside person. 

What happens if the dealership employee was driving during the accident?

When a dealership employee or owner drives the dealer’s vehicle, the normal “insurance follows the car” rule applies, making the dealership’s insurance primary. O.C.G.A. § 33-34-3(d) only changes the rules when non-employees are driving. 

Can a dealership try to avoid paying any insurance coverage under this law?

No, Georgia law specifically states that any provision in the dealer’s policy attempting to eliminate excess coverage is void. The dealership must provide secondary coverage even when the driver’s personal insurance pays first. 

What if I was injured while test driving a dealer car?

If your injury was due to a defect in the dealer vehicle or resulted from the dealership’s negligence, you may have a claim against the dealership directly. However, if you caused the accident, your own insurance would be primary under O.C.G.A. § 33-34-3(d). If the at-fault driver was not driving a dealership vehicle then they would be liable, like how it is for standard car accidents.  

Does O.C.G.A. § 33-34-3(d) apply to motorcycles and trucks sold by dealers?

Yes, the Georgia statute applies to all motor vehicles owned by dealers, which includes motorcycles, trucks, SUVs, and any other vehicles the dealership has for sale or service. 

What happens if I get into an accident in a dealer car with lapsed insurance?

If your insurance has lapsed or was cancelled, you are treated as having no insurance coverage, which means the dealership’s insurance becomes primary and must pay first for all damages. 

How long do I have to file a lawsuit if a Georgia dealership vehicle injured me?

Under Georgia’s statute of limitations, you generally have two years from the date of the accident to file a personal injury lawsuit. However, you should start the insurance claims process immediately and consult with an attorney as soon as possible. 

Can the dealership be held liable if they let someone without insurance test drive?

Yes. Dealerships have a responsibility to ensure drivers are properly insured before allowing test drives. If the dealership fails to verify that a test driver has insurance coverage, they lose the protection of O.C.G.A. § 33-34-3(d) and their insurance pays first.