Is it a bad idea to let a car dealership shop auto insurance rates for you?

Is it bad to let a car dealership shop insurance rates for you? Yes -- if you want to avoid high premiums and rejected claims. Shopping for auto insurance online and doing your own research and quote comparison is the best way to find a policy that is not only affordable but provides you with the best coverage as well.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati.com. ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Aug 25, 2021

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Can't-Miss Facts

  • Shopping for auto insurance online can secure you better coverage and more affordable auto insurance rates
  • Auto dealers typically only offer quotes from three insurance companies
  • Premiums for a policy offered through an auto dealer are usually quite high

You’ve spent hours combing the web and walking through dealerships to find the best vehicle for you, and you’ve finally found the perfect one. Of course, before you hit the road with your new wheels, you’ll need automobile insurance to protect yourself and your new ride.

As they hand you the keys, the dealership may also offer you auto insurance quotes. Is it bad to let a car dealership shop insurance rates for you? Bad is a strong word, but it’s a good rule of thumb to resist the urge to kill two birds with one stone.

Auto dealer insurance programs can cost more than your budget allows, but you can always find great deals when you shop for auto insurance online. Enter your ZIP code to receive free quotes if you’ve ever thought, “Is it bad to let a car dealership shop insurance rates for you?

Why should drivers avoid buying auto insurance from an auto dealer?

According to auto dealer insurance requirements, you’ll need to provide proof of insurance prior to driving your new vehicle off the lot, but what kind of insurance does a dealership need? That will depend on if you are leasing your vehicle or cutting a check for the full asking price.

Most insurance companies will require you to purchase full coverage if you are leasing a vehicle, but if you are paying for it out of pocket, you could simply purchase liability if you wanted to, although that is not an advisable strategy.

Now, buying auto insurance from the dealership is certainly convenient, but it may have a negative impact in the long run. If you examine the auto insurance policies available from an auto dealer closely, you’ll detect a slew of potential issues.

Limited Coverage Options

An auto dealer’s primary objective is to sell as many vehicles as possible, not provide stellar insurance. In fact, most dealers will have partnerships with only about three insurance companies in order to streamline the process of getting you street legal.

While ensuring that anyone driving off their lot has insurance is a good thing in and of itself, it can leave the drivers holding the short end of the stick.

Since an auto dealer will not have many insurance companies for you to choose from, this means that the coverage options available to you from an auto dealer will be limited and have a low chance of fitting your needs.

Higher Premiums

Due to the nature of their partnership with an insurance company, an auto dealer will take over certain aspects of the insurance policy. Because of this arrangement, the total payment of the policy that the auto dealer must pay is typically about 40% of the actual cost.

In turn, you’ll see that an auto dealer will offer high premiums for the policies which could have harsh effects on your bank account.

No Available Discounts

Another unfortunate feature of buying auto insurance through a dealership is the severe lack of discounts. Discounts can help reduce auto insurance rates dramatically. Just take a look at the wide variety of discounts offered by many major insurance companies:

Auto Insurance Discounts Available by Company and Discount Amount
Discounts21st Century Discount AmountAAA Discount AmountAllstate Discount AmountAmerican Family Discount AmountAmeriprise Discount AmountAmica Discount AmountCountry Financial Discount AmountEsurance Discount AmountFarmers Discount AmountGeico Discount AmountLiberty Mutual Discount AmountMetLife Discount AmountNationwide Discount AmountProgressive Discount AmountSafe Auto Discount AmountSafeco Discount AmountState Farm Discount AmountThe General Discount AmountThe Hanover Discount AmountThe Hartford Discount AmountTravelers Discount AmountUSAA Discount Amount
Adaptive Cruise Control and/or Headlights----------5%--------3%--
Anti-lock Brakes--10%-3%5%-5%-5%5%5%5%-5%-5%8%5%3%--
Anti-Theft--10%-3%25%10%25%-25%20% off of comprehensive portion of policy.10% -- this discount factors in features such as VIN etching and vehicle recovery;
one anti-theft discount applies.
25%; combined with vehicle recovery discount.---15% discount off of comprehensive coverage; higher discount with "engine cut-off."8%; one total anti-theft discount applies; if vehicle recovery, a higher discount applies.5%3%--
Claim Free--35%----25%-26% for going five years without an accident.Awarded "accident free" on account for lower rating.20% if claim/violation free:
"Superior Driver"
3+ yrs=12%
"MetRewards"
5+ yrs 20%
AND
save $50 each claim-free year up to $250 (off deductible).
10%-10% if you go six months without filing a claim;
one safe driver/claim free discount applies.
20% "Safeco Safety Rewards" if you have no at-fault accidents in the last 36 months,
no more than 1 point on your license, and
no DUI in the last ten years; one safe driver/claim free discount applies.
15%; must have State Farm for at least three consecutive years without an accident.-15%-23%; must be accident and violation free to get the "Safe Driver" discount listed below;
must be accident and violation free to qualify:
23% - 5 years
10% - 3 years;
one safe driver/claim free discount applies.
12%; "Premier Driver Discount"
4%-12%, depending on driving record;
12% is for being accident and violation free for five years; one safe driver/claim free discount applies.
Not available in HI.
Continuous Coverage-----3%-------No gaps or cancellations;
discount depends on how long you have been consistently insured.
10% for going six or more months with no more than a 30-day coverage gap.7% if you have been with Safeco or previous provider for one year or longer; five or more years gets you the highest discount.--10%; discount applies at each renewal.-15%-
Daytime Running Lights--2%------1%5%5%5%-5%---5%3%--
Defensive Driver5%-10%10%-5%5%10%--10%7%5%10%10%5%5%8%5%10%10%3%
Distant Student--35%---------10%--15%--5%3%7%-
Driver's Ed--10%--5%10%---10%10%-10%10%5%15%8%5%3%8%3%
Driving Device/App--20%40%---25%--30%15%40%20%-30%50%--10%30%5%
Early Signing--10%---10%10%---15%8%--8%----10%12%
Electronic Stability Control--2%--5%----5%-----------
Emergency Deployment---------25%------------
Engaged Couple------10%---------------
Family Legacy-----5%---------------10%
Family Plan------25%-----25%------5%--
Farm Vehicle--10%-------------------
Fast 5-------5%--------------
Federal Employee---------8%10%-----------
Forward Collision Warning-----8%----5%--------3%--
Full Payment--10%--4%-10%--$5---5%15%-8%15%20%7.5%-
Further Education-------15%--10%-15%---------
Garaging/Storing---------------------90%
Good Credit------------"Financial Stability"
gets you a lower rate. You must also have stable residence.
-------
Good Student--20%--10%25%10%-15%22.5%15%10%-10%15%25%8%5%3%8%3%
Green Vehicle--10%-----5%-10%--------3%10%-
Homeowner-----5%12%----2%5%-10%10%3%5%5%-5%-
Lane Departure Warning-------------Safety features get automatic discounts applied when VIN entered in system. --------
Low Mileage-----10%-15%-------20%30%-----
Loyalty-----5%------5%--7%---5%--
Married--------------5%-------
Membership/Group-7%--15%-----10%-7%------20%--
Military-------25%-15%4%15%--25%-------
Military Garaging---------------------15%
Multiple Drivers-------------------5%--
Multiple Policies--10%--15%25%--10%20%10%10%12%-15%17%15%10%20%13%-
Multiple Vehicles-----15%15%--25%10%-20%10%15%15%20%15%5%5%8%-
New Address----------5%-----------
New Customer/New Plan-----------10%--10%-------
New Graduate----------5%-----------
Newer Vehicle--30%---10%---------40%--3%10%12%
Newly Licensed----------5%-----------
Newlyweds----------5%-----------
Occasional Operator---------------------Discount based on operator's individual driving record.
Occupation------10%---10%-15%------10%--
On Time Payments--5%-----------------15%-
Online Shopper-------11%-----7%--------
Paperless Documents- -10%--2%------5%$50-`-------
Paperless/Auto Billing-5%--2%-----25%$30-$410%$28%2%$53%3%
Passive Restraint--30%30%3%30%-33%-40%-5%20%-5%2%40%8%5%3%--
Recent Retiree----------4%--------3%--
Renter-----2%-30%--------------
Roadside Assistance-------5%--------------
Safe Driver--45%--15%-40%15%-12%35%31%10%20%15%---23%12%
Seat Belt Use---------15%------------
Senior Driver--10%--------10%-----5%5%---
Stable Residence-------------------5%--
Students and Alumni-------15%--10%-7%---------
Switching Provider-------5%--10%10%--10%--5%5%---
Utility Vehicle--15%-------------------
Vehicle Recovery--10%-5%10%-25%-25%35%10%25%---5%8%-3%--
VIN Etching----------5%10%----------
Young Driver------10%--------------$75

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As you can see, your vehicle can do more than just transport you from place to place. If it has features like anti-lock breaks, it could save you some money too.

Since a dealer may not work with your preferred auto insurance company, is it bad to let a car dealership shop insurance rates for you? It certainly looks that way.

Enter your ZIP code below to compare auto insurance rates.

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Why should drivers shop for auto insurance online?

Is it bad to let a car dealership shop insurance rates for you since affordable auto insurance can be found online? In a word, yes. With your smart phone in hand, you can shop the market and find the perfect auto insurance company for you.

Not only can you find great coverage options, but you won’t have a sales persona constantly checking over your shoulder. You take your time to make your decision.

How can a driver find the right insurance policy?

If you find yourself in the “yes” camp when questioning is it bad to let a car dealership shop insurance rates for you, then buy auto insurance from an outside company.

With a few easy steps you can find the perfect insurance company for you. Request free quotes online and then compare the coverage options and rates. The Insurance Information Institute suggests reviewing your own information, like how often you drive, before finalizing any deals as well.

After that, it’s always helpful to read reviews about the companies you’re interested in.

Getting an idea of how a company operates will help you decide which one is a better fit for your budget and driving style.

Buying Auto Insurance from a Dealer: The Bottom Line

If you’re still wondering, “With such high auto insurance rates, is it bad to let a car dealership shop insurance rates for you?” The answer is a resounding yes.

An auto dealer may have a lot of options when it comes to vehicle types, but when it comes to insurance, they won’t have much to offer you. Shopping for auto insurance online will allow you to look over all of your options before you sign on the dotted line.

If you find yourself in the “yes” camp when questioning is it bad to let a car dealership shop insurance rates, then enter your ZIP code today to receive free quotes from companies near you.

Free Auto Insurance Comparison

Enter your ZIP code below to compare auto insurance rates.

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