Pros and Cons of Placing Car Insurance Agencies in Auto Dealerships


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A new idea has entered the car insurance market. Earlier this year, Allstate launched a dealer services program which allows auto dealers to open Allstate agencies in their showrooms. This is a novel sales approach for a large-scale insurance company and an enticing offer to auto dealers who may be looking for new ways to increase their customer service ratings.

Typically, when you purchase a new vehicle, you must go to your insurance agency to update your policy before driving the car off the lot. Although this has been standard procedure for decades, today’s world is all about instant gratification, so attitudes are changing. The lag time between purchasing a vehicle and getting the OK to take it home has become more of an annoyance to consumers, especially since it is now possible to shop insurance quotes and purchase a policy on your smartphone.

However, even with these new mobile services, you still need an insurance agent to verify your new policy and send you a declaration of insurance page before you can make it official. This is where the Allstate Dealer Services program beats its competition; it removes that lag time between purchasing a new car and getting it insured. Clearly, this program is a sales and marketing win-win for Allstate, but is it good for dealership business? Below are a few pros and cons to consider.

Pros

  • Ideally, this service should save customers a lot of time. Time is one of the most important components to good customer service. By allowing a client to purchase and insure their vehicle at the dealership, auto dealers are streamlining the process, making it more convenient than ever to buy a new car.

  • By promoting Allstate, the dealership may open itself up to discount opportunities from the agency. For example, Allstate may offer an employee discount to all dealership employees who make the switch to the agency.



  • Customers can take care of all of their insurance needs at the dealership agency. There’s no need to go to another Allstate location to purchase other insurance products.

Cons

  • If the dealership carries a car brand that offers its own car insurance policies, it could create a conflict of interest. For example, Volkswagen provides coverage to customers through the Liberty Mutual MyVWInsurance plan. Legal trouble could ensue if a dealer chooses to promote Allstate instead of the insurance agency working with its car brand.

  • Allstate may not offer the best insurance quote. Even though you help your customers save time, you may not help them save money.

  • Having an agency located on the dealership’s property will take up extra space, so if you are already strapped for square footage, it could create a problem for both parties.

Before launching the program, Allstate tested it in 11 dealerships across the country. So far, customers have been satisfied with the service. Should the program continue to experience success, there’s a good chance that other insurance companies (such as State Farm and Progressive) will join the party and offer a similar program to auto dealers.

Susan Wells writes for www.InsuranceQuotes.org. As an expert on personal and business insurance, Susan strives to share the most relevant and useful information in the industry with her readers. She is open to reader questions and comments below.

Michael Bowen

9 Comments

  1. Avatar
    Ron Ojeda March 10, 2016

    Hi Susan, In your research did you find any large multi-state independent insurance brokers who are doing the same thing as Allstate? But instead of an agent in the dealership they have a large central processing office with multiple licensed producers.

    Reply
    • Avatar
      Gabriel Carlos Martinez September 29, 2018

      Hi Ron, did Susan ever respond to this question you asked?

      Reply
  2. Avatar
    Sara April 11, 2016

    I work at a dealership as an agent/office manager . I can tell you base on my experience that is a good deal for the right dealership but also can be a disaster money wise talking also very hard to find/keep good producers.

    Reply
  3. Avatar
    R. Indra June 17, 2016

    Hi Susan,
    What do you suggest if we need to create some incentive program to the frontliners at the dealer … so that they are motivated enough to offer our Motor Insurance.

    Reply
    • Avatar
      Kevin Bradberry October 02, 2018

      You can pay them the same way you pay the salespeople for aftermarket, and other ancillary products. spiff them, but most importantly, Train them!

      Reply
  4. Avatar
    Christopher Huddleston January 10, 2017

    Is it legal in New Jersey?

    Reply

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