Dealership Insurance

When buying a car, many consumers focus on the sticker price, financing options, and vehicle features. However, one crucial aspect often overlooked is auto insurance. In recent years, the integration of insurance offerings directly at the dealership—known as dealership or embedded insurance—has gained significant traction. This approach not only benefits consumers by simplifying the buying process but also offers dealerships a valuable revenue stream and a way to protect their bottom line.

In this comprehensive guide, we’ll explore the evolving landscape of dealership insurance, why it matters, and how it’s reshaping the automotive sales experience. With insights from industry experts and the latest data, this article will help you understand everything you need to know about dealership insurance in 2025 and beyond.

Dealership insurance refers to the practice of offering auto insurance policies directly to car buyers at the point of sale. Instead of purchasing insurance separately through an agent or online, customers can get quotes and bind coverage right at the dealership. This embedded insurance model streamlines the process and provides immediate coverage, reducing the risk of uninsured driving.

The growth of dealership insurance is driven by several factors. First, consumers increasingly want convenience and transparency in their car buying experience. A 2025 study by Polly revealed that 72% of recent car buyers expressed a preference for getting auto insurance at the dealership. This strong consumer demand is pushing dealerships to integrate insurance options as a standard part of the sales process.

Secondly, dealerships are facing shrinking front-end profits on vehicle sales due to competitive pricing and market pressures. Mike Burgiss, Chief Marketing Officer at Polly, explained, “As front-end profit continues to shrink, dealerships are seeking new ways to protect profit. Our data shows that embedded insurance is not just a value-add for customer satisfaction, it’s becoming essential to protecting a dealership’s bottom line.” This shift has made embedded insurance a strategic priority for many dealers.

Moreover, the technological advancements in the insurance industry are making it easier for dealerships to offer these services seamlessly. Many dealerships are now utilizing sophisticated software platforms that allow them to compare multiple insurance quotes in real-time, ensuring that customers receive the best possible rates and coverage options. This technology not only enhances the customer experience but also empowers sales staff with the tools they need to effectively communicate the benefits of dealership insurance, fostering a more informed buying decision.

Additionally, as the automotive landscape evolves with the rise of electric and autonomous vehicles, the insurance needs of consumers are also changing. Dealerships are beginning to recognize that offering tailored insurance products that cater to these new technologies can set them apart from competitors. For instance, specialized coverage for electric vehicles may include benefits such as charging station reimbursement or coverage for battery replacement, which can be appealing to eco-conscious buyers. By adapting to these emerging trends, dealerships can further solidify their position in the market and enhance customer loyalty.

Offering insurance at the dealership is proving to be financially advantageous. According to Polly’s Q2 2024 Embedded Auto Insurance Report, dealerships that provide embedded insurance quotes see an average back-end gross profit of $2,367 per sale. This figure represents a 20% increase over deals where insurance is not offered at the point of sale.

This profit boost comes from commissions and fees associated with insurance policies sold, as well as improved customer retention and satisfaction. When customers can secure insurance coverage immediately, they are more likely to complete the sale and less likely to delay or abandon the purchase due to insurance concerns.

Wayne Pastore, President and COO of Distribution for Polly, highlighted the opportunity for dealerships: “It's not surprising that consumers are focused on total cost of ownership, including insurance, now more than ever. This is a huge opportunity for dealers to include insurance in the car buying process.” By addressing insurance upfront, dealers can differentiate themselves and build long-term customer relationships.

Moreover, the integration of insurance offerings can streamline the purchasing process, making it more efficient for both the dealership and the customer. For instance, by having insurance options readily available, dealerships can reduce the time spent on paperwork and negotiations, allowing for a smoother transaction experience. This efficiency not only enhances customer satisfaction but also allows sales staff to focus on providing exceptional service, ultimately leading to increased sales volume.

Additionally, as the automotive industry continues to evolve, the trend of embedded insurance is becoming increasingly relevant. With the rise of digital platforms and online car buying, dealerships that adapt to this model can capture a larger share of the market. By leveraging technology to offer personalized insurance solutions, dealerships can meet the specific needs of their customers, ensuring that they remain competitive in a rapidly changing landscape. This adaptability can further solidify a dealership's reputation as a one-stop shop for automotive needs, fostering loyalty among customers who appreciate the convenience and comprehensive service.

Understanding insurance costs is essential for both dealerships and buyers. Nationally, the average monthly auto insurance quote in the U.S. was $195 in the first quarter of 2025, showing a slight decrease from the previous quarter. This data, reported by Polly’s Q1 2025 Embedded Auto Insurance Report, suggests some stabilization in insurance pricing after years of volatility.

However, insurance costs vary widely by region. For example, in April 2025, New York’s car insurance rates were over 150% higher than the national average, with average monthly quotes reaching $316. This disparity presents a challenge for dealerships in high-cost states, as insurance affordability can become a barrier to vehicle ownership. Factors contributing to these regional variations include population density, local laws, and the prevalence of accidents in specific areas. Urban centers often experience higher rates due to increased traffic and a greater likelihood of claims, while rural areas might benefit from lower premiums due to fewer incidents.

Dealerships in such regions can leverage embedded insurance to offer competitive, bundled pricing and help customers navigate complex insurance markets. Providing tailored insurance solutions at the dealership can ease the financial burden and improve the overall buying experience. Additionally, dealerships can educate customers on the importance of maintaining a clean driving record and understanding their coverage options, which can lead to lower premiums over time. By fostering a relationship with local insurance providers, dealerships can also negotiate better rates for their customers, making car ownership more accessible and appealing.

The auto insurance industry is grappling with rising claim severity and increasing costs. The 2024 LexisNexis U.S. Auto Insurance Trends Report highlights that bodily injury claims have risen by 20%, while material damage severity has increased by 47% since 2020. These trends contribute to higher premiums and more complex claims processing. Insurers are now faced with the daunting task of not only managing these rising costs but also ensuring that they remain competitive in a market that is increasingly sensitive to price fluctuations. As a result, many companies are investing in advanced data analytics and technology to better assess risk and streamline their operations.

Legal involvement in claims also plays a significant role in cost escalation. A 2024 study by LexisNexis Risk Solutions found that 93% of claimants who sought legal counsel were likely to retain those services in the future, indicating that attorney involvement significantly impacts claim costs. This dynamic pressures insurers to adjust pricing and underwriting strategies, which in turn affects consumers and dealerships. Moreover, the rise of social media and online reviews has amplified the scrutiny on insurers, as customers share their experiences, both positive and negative, influencing public perception and potentially swaying new customers. Insurers must navigate this landscape carefully, balancing the need for profitability with the imperative to maintain a positive brand image.

For dealerships offering embedded insurance, these industry challenges underscore the importance of partnering with reputable insurance providers who can manage claims efficiently and maintain competitive pricing. Transparent communication about insurance costs and coverage options is critical to building trust with customers. Additionally, dealerships can enhance their offerings by providing educational resources to help consumers understand the complexities of auto insurance. By fostering a culture of transparency and support, dealerships can not only differentiate themselves in a crowded market but also empower their customers to make informed decisions regarding their insurance needs.

Furthermore, as the industry evolves, the integration of telematics and usage-based insurance models is becoming more prevalent. These innovations allow insurers to tailor policies based on actual driving behavior, potentially leading to fairer pricing for safe drivers. However, this shift also raises concerns about privacy and data security, as consumers may be hesitant to share their driving habits with insurers. Addressing these concerns through robust data protection measures and clear communication about how data is used will be essential for gaining consumer trust in this new era of auto insurance.

From the consumer perspective, embedded insurance offers several advantages. First, it simplifies the car buying process by consolidating vehicle purchase and insurance procurement into a single transaction. This reduces the hassle of shopping around for insurance separately and ensures immediate coverage, which is often required by law before driving off the lot.

Additionally, dealerships can provide personalized insurance quotes based on the buyer’s profile and vehicle choice, potentially offering better rates or tailored coverage options. This convenience is especially valuable for first-time buyers or those unfamiliar with insurance markets.

Moreover, the integrated approach can improve customer satisfaction and peace of mind. Knowing that insurance is secured at the dealership helps buyers avoid coverage gaps and unexpected expenses. As the market evolves, more dealerships are likely to enhance their insurance offerings to meet these consumer needs.

Another significant benefit of embedded insurance is the potential for bundled discounts. Many dealerships partner with insurance providers to offer exclusive deals that are not available through traditional channels. This can lead to substantial savings for consumers, as they may receive lower premiums or enhanced coverage options simply by purchasing their vehicle and insurance together. Additionally, these bundled services often come with added perks, such as roadside assistance or rental car coverage, which can further enhance the overall value of the purchase.

Furthermore, embedded insurance can foster a stronger relationship between consumers and dealerships. By providing a seamless experience that encompasses both the vehicle and its insurance, dealerships can build trust and loyalty with their customers. This relationship can lead to repeat business and referrals, as satisfied customers are more likely to return for future purchases or recommend the dealership to friends and family. As a result, embedded insurance not only benefits consumers but also creates a win-win situation for dealerships looking to differentiate themselves in a competitive market.

Looking ahead, embedded insurance is poised to become a standard feature in automotive retail. Advances in technology, such as real-time data integration and digital underwriting, will enable faster, more accurate insurance quotes at the point of sale. This will further streamline the buying experience and strengthen the value proposition for both dealers and consumers.

Dealerships that embrace embedded insurance early will have a competitive edge by offering a seamless, one-stop solution for vehicle purchase and protection. As insurance continues to be a significant component of total cost of ownership, integrating it into the sales process will be essential for meeting consumer expectations and maintaining profitability.

For consumers, the trend means greater convenience, transparency, and potentially lower costs through bundled offerings. As more data becomes available, insurance products will become increasingly personalized, enhancing coverage relevance and affordability.

Moreover, the integration of artificial intelligence and machine learning into underwriting processes will allow insurers to assess risk more accurately and tailor policies to individual driving behaviors. This shift not only benefits consumers through customized rates but also promotes safer driving habits, as drivers may be incentivized to adopt behaviors that lower their insurance premiums. With telematics becoming more prevalent, the potential for real-time adjustments to coverage based on driving performance will revolutionize how consumers interact with their insurance providers.

In summary, dealership insurance is transforming the automotive landscape by aligning the interests of buyers, sellers, and insurers. Staying informed about these changes will help all parties navigate the evolving market effectively. Additionally, as the automotive industry continues to evolve with the rise of electric vehicles and autonomous driving technology, the insurance landscape will need to adapt accordingly, ensuring that coverage options remain relevant and comprehensive in addressing the unique risks associated with these innovations.

For more detailed insights, visit Polly’s Q1 2025 Embedded Auto Insurance Report and LexisNexis 2024 U.S. Auto Insurance Trends Report to explore the latest industry data and trends.