Car insurance professionals are not pleased with General Motors’ new free insurance incentive to generate new GM car buys. What about consumers who have more than one vehicle? What about high risk drivers? What happens after the year of free insurance, if a consumer no longer can afford the comprehensive coverage?

GM is collaborating with MetLife Home and Auto to provide a no-cost, one-year car insurance policy as an incentive to attract new car buyers. GM is testing the program in Washington and Oregon, areas with heavy imports.

It is innovative, but is it legal? 18 departments have approved applications for the free car insurance plan. The Indiana Department of Insurance requested MetLife Home and Auto to withdraw its filing, so it was rejected because they felt it was not legal.

Obviously the insurance agents in WA and OR are not happy, because when a consumer buys a car, they must go out and shop auto insurance. But not with this program. The Professional Insurance Agents Western Alliance claims the program may not be legal. GM spokesman Tom Henderson says the auto maker is testing the program “to determine consumer appeal of insurance as a new standard feature,” like a warranty packaged in the cost of a new vehicle.

I understand the program makes buying a new GM vehicle more affordable, if they do not raise the price in some other area, say financing or lack of other rebates.

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Filed under: Metlife

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