The untapped potential of embedded auto insurance in car dealerships

Despite leveling off in 2024, the cost to own a car remains at an all-time high, reshaping how buyers approach the market. Affordability now leads the conversation, with shoppers paying closer attention to long-term expenses.

One of the biggest drivers of this shift? Auto insurance. 

Premiums have skyrocketed 50% over the past three years, according to the Bureau of Labor Statistics, adding substantial weight to the total cost of ownership. And it doesn’t stop there — repair costs have climbed 41% since 2022, making even minor accidents an expensive headache.

The good news? The auto insurance market is cyclical. Premiums increase as insurance carriers need additional money to pay increased claims and higher repair costs. Right now, things appear to be stabilizing, and some brokers believe we’re on the cusp of transitioning to a more favorable market where insurance premiums aren't increasing as aggressively.

• A Polly analysis of over 400,000 insurance quotes showed that the average monthly insurance quote in Q3 2024 was $199 — 0.4% lower than the previous quarter and only 3% higher than Q4 of 2023.

But no matter what the market does — the reality is — auto insurance is non-negotiable for all drivers. And dealerships have an opportunity to not only make it easier for their customers to rate shop for a potentially lower premium but also generate more income in the F&I office. 

How? By embedding auto insurance into the sales process.

For dealers — embedded auto insurance involves integrating a digital auto insurance marketplace at the point of sale, where customers can get real-time quotes from multiple carriers. This helps customers find the most competitive rate on the spot — making it easier for them to commit to the insurance policy (and the car).

And the current state of premium costs has sparked an unprecedented wave of shoppers looking to switch out their policy for a lower rate, according to the 2025 Embedded Auto Insurance Study by Polly.

By the numbers: 

• The cost of auto insurance is now more important to car buyers than the brand of their vehicle and whether or not it has the latest features.

• September 2024 set a new record for insurance shopping. 13.8% of car buyers shopped, and 4% of buyers switched, according to J.D. Power.

• 52% of all buyers and 69% of Millennials and Gen Z buyers said they would buy a nicer vehicle or upgrade their car if they could save $75 on their auto insurance per month while in the dealership.

It’s clear — that consumer desire to shop around is active. But doing the leg work themselves is tedious. It takes hours to comb through quotes online only to get bombarded with texts, emails, and phone calls. And some customers might end up settling for their policy — even if it’s not the best deal — just to end the process.

But an embedded auto insurance marketplace instantly delivers dozens of tailored insurance quotes to customers for a much more straightforward and transparent process.

• 54% of buyers had a better experience when they had in-dealership insurance options. 

And for dealers — it’s a prime opportunity to earn more F&I income. That’s about as close to a win-win as you can get in the car business.

• 73% of younger car buyers would buy extra protection products if they could save money on insurance.

• 85% of buyers bought an F&I product after they were introduced to insurance options. 

• When car buyers are connected with insurance options at the dealership, 85% chose at least one protection product — compared to just 53% of those who weren’t offered insurance solutions.

The end result? Dealerships have 18% higher F&I gross when insurance is introduced at the dealership. Given the average F&I gross per vehicle is $1,568 — that’s an average of almost $300 more per vehicle.

What’s next: As insurance costs stabilize and technology evolves, embedded insurance could become the new baseline for what buyers expect. Dealerships that adopt this now won’t just capture more income — they’ll build a reputation for being forward-thinking, customer-focused, and ready to meet buyers where they are.

This year, Polly has introduced faster online insurance, expanded its carrier lineup, and provides quotes for 98% of drivers, regardless of driving history. Click here to learn more.

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Transform Buyer Hesitation into Action

Every day, buyers walk into your dealership ready to make a purchase—until insurance costs stop them in their tracks.

Polly changes that.

By embedding auto insurance into your sales process, Polly helps customers save on coverage while giving you the power to seal the deal.

Even better? 85% of buyers offered in-dealership insurance also purchase F&I products—compared to just 53% without it.

With Polly, it’s simple: save your customers money, close more deals, and boost your bottom line.