As auto insurance rates come back down, dealers presenting quotes in the finance office are seeing a boost in F&I product sales.
The Polly Insurance Agency’s Q1 2026 Quarterly Embedded Auto Insurance Report showed that dealers presenting insurance quotes to customers during the purchase process earned an additional $343 per transaction on F&I.
Additionally, those selling insurance to customers are seeing a 35% boost or an extra $564 per sale in F&I gross.
Zooming in: Since hitting record highs following the COVID-19 pandemic, insurance rates are continuing to drop, which is welcomed news to drivers and dealers looking to help car buyers tackle affordability issues.
Polly’s Report, based on quotes from nine insurance carriers providing coverage across the nation, showed:
Average rates have dropped from $202 at the end of 2024 to $168 at the start of 2026.
Rates are moderating since rising to catch up with increased vehicle prices and the cost of claims after 2022, where prices rose from $182 in Q3 of 2023 to a high of $202 to start 2024.
This is the fifth straight quarter of price declines.
Christopher Pres, VP of Automotive at Polly, explained that the regulated insurance industry could only make incremental increases to rates, delaying its ability to catch up with the escalating vehicle prices and claims costs after the pandemic.
“By the time they caught up, it was a good year or two after the initial supply shock hit. Now, all of a sudden, they’ve been able to get the right prices and insurance companies are profitable again,” Pres said. “Because the market has evened out, they’re getting the right price and can price appropriately.”
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
Get insights trusted by 55,000+ car dealers. Free, fast, and built for automotive leaders.
Takeaway for dealers: Even as insurance costs are evening out, car buyers are still stretched. New car prices are landing around $48,667, and used prices are sitting near $25,390, according to Cox Automotive’s April data, all while the average interest rates remain between 9.7% (new) and 14.36% (used).
Nearly one-third of buyers are also bringing in a $7,183 in negative equity into the transaction.
Pres offers that dealers can find presenting embedded insurance as a tool to help car buyers with overall affordability.
“Having options available for your customer is really important. I think the big message for our dealerships right now is you already have the affordability crisis, now you've got, a negative equity crisis on the horizon,” Pres said. “And really, insurance is one of the few ways that you can help your customer save monthly on their budget without having to affect dealership profitability, which I think is a big message.”
A quick word from our partner
Portfolio management has become a defining strategy for today’s leading dealer groups.
The most sophisticated operators are reallocating capital, optimizing brand and market exposure, and focusing leadership where it drives the greatest return—fueling a significant share of dealership M&A activity today.
At Presidio, we’re seeing this firsthand across every transaction in 2026—from targeted divestitures to strategic acquisitions as operators refine their footprint and redeploy capital for future growth.
Explore our recent transactions to see how leading dealers are putting portfolio management into action.
