Coverage for the lot, the inventory and the test drive.

Dealer plates, test drives and whose policy pays

Special dealer plates let you drive unregistered vehicles you own or lawfully possess on public roads (Vehicle Code 11715). A prospective buyer or lessee can test-drive a car you have for sale or lease for up to seven days on your plates. Dealer cars rented or leased to your salespeople for display or demonstration can run on them too. Work and service vehicles don't qualify and need their own registration.

When a car crashes and more than one auto policy applies, California Insurance Code 11580.9(a) sets the order for businesses that sell, service, test or store vehicles:

• You, an employee or an agent driving: the dealer's policy is primary, and other policies are excess.
• A customer or anyone else driving: the dealer's policy is excess over the driver's own insurance.

ISO's rating rule for the Auto Dealers Coverage Form (CA 00 25) says the form covers customers up to the compulsory or financial responsibility limits, under certain conditions. Massachusetts' residual-market manual spells out the condition: the customer has no other auto liability insurance, or carries limits below the financial responsibility requirement. The Full Covered Autos Liability Limit For Customers endorsement (CA 25 15) extends the full policy limit to customers. California's minimums for policies issued or renewed on or after January 1, 2025 are $30,000 per person, $60,000 per accident and $15,000 property damage (Vehicle Code 16056). I check which customer limit a quote carries, and whether a commercial umbrella is worth adding above it.

Copy the customer's driver's license and insurance card before every test drive. Under 11580.9(a), that policy is primary when the customer is driving.

Advertising, odometer and the CARS Act

Since October 1, 2026, California's CARS Act (SB 766) applies to licensed dealers selling or leasing light-duty vehicles under 10,000 pounds at retail. Wholesale, fleet and auction sales are among the exemptions. The DMV's notice (OLIN 2026-10) lists the main duties:

• Total price: shown in any ad that mentions a specific vehicle or financing terms, and in your first written message to the customer: email, text, quote or credit application.
• No misrepresentation: of price, availability, financing or lease terms, add-ons, trade-in payoffs or credit applications.
• Add-ons: disclosed as optional, both out loud and in writing in at least 12-point type.
• Three-day cancellation: a used vehicle priced at $50,000 or less can be returned within three business days, subject to mileage and condition requirements. This replaces the old optional two-day cancellation agreement.

The DMV says violations can be enforced under the Unfair Competition Law (civil penalties up to $2,500 per violation), the False Advertising Law and the Consumers Legal Remedies Act, along with license action, refunds and bond claims.

Federal rules apply in every state. A dealer who violates federal odometer law with intent to defraud is liable for three times actual damages or $10,000, whichever is greater, plus attorney's fees, and the buyer has two years to sue (49 U.S.C. 32710). The FTC's Used Car Rule requires a dealer selling more than five used vehicles in 12 months to post a Buyers Guide on each used car offered for sale, and a Spanish version when the sale is conducted in Spanish. It doesn't apply in Maine or Wisconsin, which have their own disclosure rules.

ISO's dealer form includes acts, errors or omissions liability coverages, and endorsement CA 25 63 excludes them. I check whether a quote keeps that part and read its exclusions.