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Embedded Auto Insurance Study


The Latest Consumer Trends and Preferences in Embedded Insurance within the Car Buying Process
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Key Findings From the Study

Generation Embedded: Millennials and Gen Z consumer desires are poised to reshape insurance in the dealership.


  • 4 out of 5 think insurance should be part of the car buying process. 
  • 75% say buying a vehicle and insurance together would be more convenient. 
  • 81% would like the option to buy Auto Insurance while purchasing their vehicle at the dealership. 
  • 89% have purchased other types of embedded insurance in the past six months 
  • 77% are already aware that they can shop for insurance while on their phones at the dealership. 

1. Car Buying Is Tougher and Pricier Than Ever

Automotive retail is at an inflection point. External economic forces, evolving buyer expectations, and other challenges like supply chain disruptions are reshaping the car buying experience. Dealerships, OEMs, and insurance providers who accelerate the adoption of a more flexible, customer-centric approach, backed by innovative tech solutions, will be better equipped to navigate this new terrain successfully.

The average annual cost of ownership is up more than 13 percent from last year to more than $12,000, or just over $1,000 a month, according to the latest research from the automobile owners group, AAA.*

2023 auto loan interest rates

US Interest Rate of Auto Loans

Auto loan interest rates

Economic headwinds are hurting everyone

Inflation is widespread and affecting car buying decisions across every economic segment, even the wealthy. Savvy dealers are looking for new strategies and products to help consumers combat the affordability crises. The sharp increase in auto loan rejection rates, coupled with rising ownership costs, are placing significant economic pressure on potential car buyers.

According to the Federal Reserve, the rejection rate for auto loans increased to 11% this year, more than twice 2022’s rate of 5.2%. This is the highest rejection rate since the start of the series in 2013. 

Denied at the dealership... auto loan rejections soar

Auto loan rejection rates

Inflation doesn't discriminate

In short, our study found that economic headwinds are hurting almost everyone. 73% of car buyers -- across all income and credit score brackets -- said interest rates affected their financing decision in one or more of the four ways listed in the chart below.  The sharp increase in average ownership costs, coupled with the rising auto loan rejection rates, reveals the significant economic pressures potential car buyers face.

Factors affect auto financing decisions

*27% of respondents said it did not affect their financing decision.

What may surprise some is that Inflation isn't merely touching low-income earners; it's widespread and affecting car buying decisions across every economic segment, even the wealthy. As such, dealers must consider new strategies and products to help consumers combat the affordability crises.

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2. Total Cost of Ownership Is Driving Car and Insurance Buying Trends

Total cost of ownership is blurring the boundaries between car and insurance buying. Consumers are seeking holistic solutions that address both vehicle and insurance needs. The auto and insurance industries have a unique opportunity to collaborate, innovate, and deliver comprehensive solutions that cater to modern consumer behavior. Deal transparency and a frictionless experience are now table stakes for doing business – in both industries. 
Car buyers are not just looking for a car:  They are considering the entire financial commitment, including insurance. 84% cite overall cost as an important attribute when buying a car with 63% naming the cost of insurance specifically. Dealers who recognize this evolving dynamic and who can help provide solutions that address these concerns will gain a competitive edge.

The total cost conundrum: Attributes most important to car buyers when buying a new vehicle

Important auto attributes

Dealers push tech, buyers want better insurance rates

65% think about cost of insurance

While OEMs and dealerships have been heavily investing in cutting-edge car technologies, the modern car buyer's focus is firmly grounded in practicality. Perhaps surprisingly, 63% of our respondents identified the cost of car insurance as a 'very important' factor in their purchase decisions. Insurance and affordability are at the forefront of car buyers' minds, indicating a keener awareness of all the financial aspects of car ownership. 

On the other hand, the rush for the latest car tech has taken a backseat as the affordability crisis continues, with only 55% of respondents ranking it as 'very important.' While advanced technology remains attractive, it's not as much of a driving force behind car purchases as some might expect. 

For car manufacturers and dealerships, this suggests that in the pursuit of innovation, the industry must not overlook the essential need for affordability. Balancing the allure of technology with practical financial considerations is the key to capturing the hearts and wallets of today's car buyers.

Before, during, and after the deal: Buyers want insurance at every step of the journey

76% of car buyers researched insurance before they drove off the lot. 

Car buyers are considering and researching insurance solutions at every step of their journey, from the initial research phase to the final purchase decision and beyond. 

Our findings reveal that a significant three out of four car buyers proactively researched insurance options before driving their newly acquired vehicle off the lot. It's a clear signal that car buyers seek not just the right car but the right insurance coverage tailored to their needs. 

When Did You Start Researching Car Insurance?

When buyers think about auto insurance

Insurance considerations are no longer an afterthought but a core part of the car buying process. 

What's even more intriguing is that over half of the respondents embarked on their insurance research journey even before setting foot on the dealership lot.

This early engagement signifies a new level of preparedness among buyers, driven by the desire for a seamless car buying experience.

Notably, younger buyers, often considered more tech-savvy and proactive, were even more likely to initiate their insurance research at an early stage.

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3. Gen Z & Millennials Demand Embedded Insurance Options in the Dealership

4 out of 5 of Gen Z and Millennials view insurance as an integral part of the car-buying process. This finding is derived from two key survey insights: first, 79% of Gen Z and Millennials expressed a preference for having insurance integrated into the car deal itself. Second, 81% indicated a desire to have the option to purchase insurance at the point of buying their car. These responses collectively underscore the importance that these generations place on the convenience and integration of insurance in the car-buying experience.

Younger generations embrace non-traditional insurance channels with enthusiasm. They are just as comfortable buying insurance through an embedded insurance app at a dealership as they are calling 1-800-GEICO. About 65% of them would buy insurance via an embedded app at a dealership, roughly equivalent to the 66% comfortable with calling a well-known insurance number like 1-800-GEICO. This trend highlights the importance of innovative, tech-driven insurance solutions within the dealership.

Insurance availability when buying cars

For this generation, it isn’t just about the insurance; it’s about the ease and seamlessness of having the whole deal. The dealership of the future isn't just a place to buy a car; it's a destination where they can seamlessly access the comprehensive solutions they need to embark on their automotive journey with confidence.

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4. Embedded Insurance Is Going Mainstream

Comfort with embedded products, such as insurance and extended warranties, is on a steady rise. This trend is particularly pronounced among the forward-thinking Millennials and Gen Z cohorts. They have moved beyond merely being comfortable with embedded products to have come to expect them as an integral part of their buying experience. 

Efficiency and convenience are the driving forces behind this shift. Time is of the essence, and consumers want 'one-stop-shop' experiences. Again, this sentiment resonates most deeply with the younger generations, who tend to seek seamless, all-encompassing solutions that simplify their lives. 

For many, the transition towards embracing embedded insurance solutions began elsewhere but has extended to their car buying journey. It's not just about buying a car; it's about securing a comprehensive package that includes everything they need. 

The evidence is in the numbers: an increasing number of Millennials and Gen Z buyers are already familiar with and actively purchase travel insurance when booking flights or opt for extended warranties while purchasing their phones or appliances. These behaviors reflect a larger shift towards holistic and efficient buying practices. 

Even the terminology “embedded insurance” is becoming more common

What is embedded insurance


Implications for Dealers

Car Buyers are Desperate to Save Money 

The affordability crisis isn’t going away anytime soon. Dealers who are part of the solution can become allies to car buyers by providing them with ways to save money on other aspects of their purchase, like insurance. In short, tools that help customers save money while purchasing their vehicle can help close deals. 

Embedded Insurance is Now an Expectation 

Millennials and Gen Z are adopting embedded insurance products. Given that 83% of these groups have recently purchased other types of embedded insurance, dealerships should investigate embedded auto insurance offerings. These tools can offer a comprehensive digital experience, bridging the gap between buying the vehicle and buying insurance. 

Customers Want a Holistic Buying Experience 

Automotive, insurance, and macro-economic trends are interrelated, and it pays for dealerships to think holistically. Those who aim to provide an all-encompassing car-buying experience – integrating vehicle specifications, financing options, insurance, and post-sale services – will have an advantage over those who do not. 

Access our Complete 2024 Study Now


Polly conducted an online survey of 1,000 Americans 18 and over who had purchased a car within the last 12 months.
The online survey was completed between August 22nd and August 26, 2023.
The survey explored recent car buyer experience, expectations, feelings, and desires within the current socio-economic landscape.