Auto Insurance: Deal-Killer or Dealmaker?

Everyone talked about how insurance rates impacted auto sales in 2024.

It’s true that rates have risen to unprecedented levels. What’s also true is auto insurance doesn’t have to kill the deal. In fact, auto insurance can be a dealmaker and even a deal sweetener. Here’s how.

Rising insurance costs could actually help dealerships save buyers money when they need it most — during the deal. That could help sell more cars.

Here’s why. Car shoppers are more aware than ever of the total cost of ownership (including insurance). They want a fully integrated dealership experience (again, including insurance), and they even are willing to spend more on finance and insurance products if they get insurance as part of the deal.

Dealerships that adapt to these expectations can close more sales. Polly’s 2025 Embedded Auto Insurance Study reveals consumer expectations about insurance in the car-buying process are changing and changing fast. That might just be a silver lining for dealerships.

Pocketbook pressure

Today’s buyers are focused on total cost of ownership. In fact, cost of insurance ranked above vehicle brand and new technology features when buyers were deciding which car to buy. What may be surprising is that 52 percent of all buyers and 69 percent of millennials and Gen Z buyers said they would buy a nicer vehicle or upgrade their vehicle if they could save about $75 a month on insurance while in the dealership. Buyers are feeling pressure in their pocketbooks, but they’re still open to spending more on their cars if dealerships can save them money elsewhere.

Convenience is king

An all-in-one shopping experience is becoming non-negotiable for car buyers. Buyers value a convenient experience where they can address both their car purchase and insurance needs in a single transaction. Eighty-four percent of millennials and Gen Z respondents said they would feel better about their dealership experience if it included an embedded auto insurance solution. They want a seamless approach that not only saves time but also builds trust and increases customer satisfaction.

Unlocking insurance’s hidden potential

Insurance can even be a game-changer for F&I profitability. According to the study, 85 percent of buyers purchased at least one F&I product after being introduced to insurance options during the car-buying process compared with only 53 percent when they were not offered insurance. And almost three-quarters of millennial and Gen Z buyers said they would purchase extra protection products if they could save money on insurance. When dealerships integrate insurance discussions early and effectively, they create opportunities to sell extended warranties, GAP insurance and other high-margin products to drive higher overall F&I gross.

Loyalty, loyalty, loyalty

Loyalty makes or breaks your dealership. What better way to drive customer loyalty than to save them money and provide a complete experience during the car deal. Dealerships that offer insurance solutions to their customers could see stronger satisfaction ratings and increased referral rates. Eighty-two percent of millennials and Gen Z survey participants said they would recommend a dealership that includes embedded insurance options. And 81 percent of these buyers indicated they would return to the same dealership for maintenance and repairs. Insurance could be a missing link that strengthens the customer-dealership relationship.

They expect tech

Millennials and Gen Z customers are digital natives, and dealerships need to keep pace. The study revealed 88 percent of these younger buyers prefer to shop for insurance on their phones during the car-buying process. This tech-first mindset underscores the importance of offering digital insurance solutions that are quick, transparent and easy to use. For dealerships, investing in these tools is no longer optional — it’s the cost of doing business in 2025.

Insurance can make or break deals

Buyers are prioritizing affordability, convenience and technology like never before. That means your insurance solution (or lack thereof) can make or break deals. Dealerships that meet these demands will not only enhance the car-buying experience but also unlock new revenue streams, build long-term loyalty and stay ahead in an increasingly competitive market.

And as consumer preferences evolve and financial pressures continue, integrated insurance won’t just be an opportunity for savvy dealers — it will become a necessity for dealerships. It could even become a dealmaker.

Originally published on Automotive News.