Drivers want embedded insurance options when they buy a car: survey

A majority of drivers said that integrating the auto insurance process with car buying would make car ownership less of a hassle, a recent survey said.

The annual cost of ownership has risen by over 13% from last year, with the average consumer spending roughly $1,000 a month, according to the Polly survey. While the cost of financing a car has increased in the current high-interest rate environment, drivers also have to deal with the rise in the price of insurance.

For most buyers, the cost of insuring a vehicle has become a core part of the car buying process. Over half (53%) of all respondents said they began researching insurance premiums before buying their vehicle, and 76% of car buyers researched insurance before driving off the lot. Moreover, 80% noted that insurance should be integrated into the car-buying process, and 75% said buying both simultaneously would be more convenient.

"In the not-so-distant past, insurance used to be a separate entity in the world of consumer purchases," Ben Jastatt, Polly's senior director of communications said in a statement. "You'd buy your car, and then you'd seek out insurance from a different provider. But that's changing, and quickly. Comfort with embedded products like insurance and extended warranties is on the rise. But it's not just about comfort; it's about expectation, particularly among Millennials and Gen Z. They've come to expect them as part of the package."

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Telematics is one way to lower costs

One way drivers can reduce the cost of car ownership is through telematics programs, which track driving data to determine factors like speed and braking patterns. These programs can save drivers about $332 a year, but only if you drive safely, according to a Policygenius report.

The option to drive with telematics has become increasingly popular, with customer participation doubling since 2016. Still, that accounts for only 17% of auto insurance customers. However, the rising cost of auto insurance may convince more buyers to accept a telematics device from their insurance provider, according to Dave Cather, clinical professor at Penn State.

"Telematics gives you the ability to measure the true causes of auto accidents in a cost-effective way," Cather said in the Policygenius report. "I also think there's a lot of people who are interested in it, but they're not so dissatisfied with what they're paying now."

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Gas prices declining

Fueling a car has at least become increasingly less expensive. Gas prices steadily decreased over 2023 after reaching an average of over $5 per gallon the year prior, according to the GasBuddy2024 fuel outlook. The expectation is that 2024 should bring more relief at the pump.

"Average gas prices next year could fall within the range of $3 to $3.50 per gallon for most of the country, with the national average projected to reach $3.38 per gallon," GasBuddy said. "That represents a potential 4% drop from 2023's average, barring any major supply disruptions or economic shocks."

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