$3000 excess for a test drive
People wanting to test drive cars and motorbikes are being asked to sign forms accepting liability for insurance excesses of anywhere from $1000-$5000 if they have an accident.
But insurers say they do not require insurers to pass the liability for the excess to customers, and could shoulder the risk themselves.
Though insurers can allow people to take test drives without requiring them to sign the forms, it has become standard practice in the new-car sales industry.
One reader test-driving a Kia car at Lower Hutt car dealership Brendan Foot found that in the event of a crash during the test drive, she would face a $3000 insurance excess.
And there was no way of reducing the excess by paying a one-off premium, as there tends to be in car hire.
David Crawford, chief executive of the Motor Industry Association, said: ‘‘It’s absolutely normal. I don’t know a dealership that doesn’t do that.’’
The riskier the ride, the higher the excess.
‘‘The excesses tend to be higher if you test-drive new motorbikes,’’ Crawford said.
There appeared to be no legal barrier to requiring customers to agree to shoulder the excesses before letting them take a vehicle for a spin.
The Commerce Commission believed it would be unlikely to breach fair contract term laws.
‘‘This isn’t something we’ve previously looked at or formed a view on,’’ a spokesman said. ‘‘At face value, it’s unlikely we would be concerned about this practice as there is likely to be legitimate business interest in applying the excess.
‘‘With regard to such an agreement being subject to unfair contract terms, the level of excess would likely be considered to be part of the upfront price, and therefore not subject to review.’’
Insurers providing specialist motor dealer insurance, were not keen to be quoted about dealers’ decisions to pass on the risk to customers, but confirmed they did not require the people testdriving cars to be responsible for the excess in the event of an accident.
The dealer could shoulder the excess instead, they said.
Test-driving a car is more risky than doing the same journey in your own vehicle.
‘‘They say that the time you are most likely to have an accident is in the first few days of owning a vehicle,’’ Crawford said.
‘‘You are more likely to have a small ding in the first few days of changing to a different vehicle.’’ Excesses vary widely. Toyota North Shore in Auckland has a test drive excess of $2000.
Honda Central Auckland, which sells motorbikes, has an excess of $2500.
But Red Baron, on Great North Rd, Auckland, which sells motorbikes worth from a couple of thousand up to $40,000, has an excess of $1500.
The excesses can be higher for test-driving luxury cars, but often not that much higher.
Aston Martin Auckland, also on Great North Rd, is picky about who gets to test drive one of their high-priced vehicles.
Its sales people are trained to make the call on who is a genuine buyer.
As a result, the test-drive excess is $5000, chump change for someone able to spend hundreds of thousands on a car.
Unfortunately for consumers, their own car insurance does not cover damage they do while driving someone else’s car, AA Insurance said.