GM to offer free car insurance to some buyers

By Posted : 07/08/2011

General Motors has unveiled a new standard feature on vehicles sold or leased in Oregon and Washington in the next two months: free car insurance for a year.

The automaker is partnering with MetLife Auto & Home to provide coverage to buyers of new 2010, 2011 and 2012 Chevrolet, Buick, GMC or Cadillac car, truck or crossover models.

The pilot program, which started July 6 and runs through Sept. 6, is open to all Oregon and Washington residents who are licensed drivers and are purchasing the vehicles for personal use. GM pays for the auto insurance for a full year, as long as the original buyer continues to own or lease the vehicle.

"It's good for our visibility and brand awareness and for creating new markets," MetLife spokesman David Hammarstrom says.

Edmunds analyst Ivan Drury says General Motors is trying to increase market share in Oregon and Washington, where about 11 percent to 12 percent of vehicles on the road are GM models, versus 17 percent to 20 percent nationwide.

"For some consumers, they could save a sizable amount of money," he says, particularly if it's combined with low finance offers.

Earlier free car insurance programs

Although no other automaker currently offers free car insurance, the idea isn't new. Volkswagen partnered with Nationwide in 2005 in a similar program, which offered Wisconsin and Illinois buyers of new Golf, Beetle and Beetle Convertible models free Nationwide car insurance for a year. The program did not continue after the three-month pilot period.

Why not just give buyers rebates? Drury says if the offer was that straightforward, "we wouldn't be talking about it right now."

The MetLife car insurance package for GM buyers includes the following coverage levels:

  • Bodily injury and property damage liability: 100/300/50
  • Personal injury protection (Oregon only): $15,000 per person
  • Personal injury protection (Washington only): $10,000 per person
  • Uninsured/underinsured motorist (Oregon only): 100/300/50
  • Underinsured motorists (Washington only): 100/300/50
  • Comprehensive: $500 deductible
  • Collision: $500 deductible

Buyers also get MetLife's car-replacement feature, which promises to replace a vehicle that's declared a total loss with a new vehicle without deducting for depreciation. Typically if a car is damaged beyond repair, standard car insurance pays the policyholder the actual cash value, which in the first year of purchase can be thousands less than the price of a new car.

The car-replacement coverage in the GM/MetLife policy is good for the vehicle's first year or first 15,000 miles, whichever comes first.

Car buyers who choose not to take the MetLife auto insurance do not get a credit or cash back.

Car insurance after the first year

After the free year of car insurance ends, customers can apply to renew their policies through MetLife or shop for affordable auto insurance through another carrier.

Hammarstrom says information about rating new customers and costs of the program are proprietary and did not provide additional details.

The terms and conditions on the General Motors website say customers may be asked to provide personal information to MetLife "to enable it to rate their policies, so it can dispatch a bill to the auto manufacturer. MetLife Auto & Home may use information provided by consumer reporting agencies, such as credit, driving record and claim history." But the process does not impact the customer's eligibility for the program.

Hammarstrom says car dealers do not have access to information about cost of the insurance when they're working with buyers.

After the program expires in September, General Motors and MetLife officials will evaluate its results and decide whether to expand it.

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