Sticker Shock 2.0: Why Insurance Costs Are Killing DealsSticker Shock 2.0: Why Insurance Costs Are Killing Deals

As auto insurance rates continue to climb, consultants advise dealers to sharpen their focus on consumer education and dealership process improvements. The payoff? Fewer deals derailed at the last minute and higher customer satisfaction.

Various dealers have told WardsAuto that some buyers’ attitudes sour during the F&I discussion when they discover insurance rates for their new vehicles. Data from AutoInsurance.com, which works with 3,000 U.S. dealers, shows that about 85% of respondents are worried about escalating car insurance costs, and 37% are “extremely” or “moderately” concerned.

“Insurance is an issue. This is especially true in Nevada, where we have some of the highest rates in the nation,” Tyler Corder, chief financial officer of Henderson, NV-based Findlay Automotive Group, headquartered in Henderson, NV, tells WardsAuto. “This is due to high accident rates, lots of drunk driving and a strong trial attorney lobby at the state legislature that blocks any attempt at tort reform.”

Nevada is not alone. New York ($4,769), Florida ($4,326), and Louisiana ($3,628) are among the states with the highest average premiums, reports Forbes.

Don’t expect rates to dip anytime soon, Kevin Filan, senior vice president, Open Lending, tells WardsAuto. Insurance companies must submit proposed rate changes to regulators, who review the data to determine if the increase is justified. That process can take up to a year, he says. Natural disasters, repair costs and supply chain issues are among the factors that play into insurance rate increases.

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Used Vehicle Demand Soars as Affordability Tightens, Education Needs Grow

According to Open Lending’s 2025 Vehicle Accessibility Report, rising new vehicle costs are triggering a surge in demand for used cars – especially among near- and non-prime borrowers. Since the pre-pandemic period, median monthly payments for new vehicles have jumped 56% for this group, and the share opting for used vehicles has increased from 49% to 56%.

This trend creates a ripple effect at dealerships, where some customers are priced out of new vehicles or face financing and insurance hurdles that require more guidance from dealerships.

Jonathan Jordan, director of sales strategy and Brandon Hartfiel, director of training and consulting, both of the JM&A Group, advise dealers to educate themselves and their staff about insurance premiums and broader affordability issues.

"It shouldn't be a surprise to the dealership team when a customer brings up insurance," Jordan tells WardsAuto. "They need to be prepared to explain why rates are high and help the customer understand it’s a market-wide issue, not just about the car they’re buying."

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Salespeople often avoid topics like insurance for fear of derailing deals. But Open Lending reports that 25% of consumers find the vehicle-lender process confusing—and dealership trust is low. This presents a clear opportunity for dealers to stand out through better education and transparency.

Hartfiel adds that process improvements around affordability don’t just close more deals. “Top-down mandates don’t always work,” he says. “Dealers see better results when frontline staff understand the ‘what’s in it for me’ and are supported with proper coaching.”

Loan Payoff as a Motivator

Affordability isn’t only about managing monthly payments. Many vehicle owners think long-term. Open Lending data shows that 61% of borrowers aim to pay off loans early, with 84% believing this helps them upgrade or replace their vehicles more easily.

Dealers who support this mindset through transparent financing and upgrade options can build deeper customer relationships.

To address insurance concerns, Jordan recommends tools like Polly, which lets customers compare quotes during the sales process. “If they can compare multiple quotes right there in the showroom, they’re less likely to walk away because of an unexpected rate,” says Jordan.

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This also reinforces that high insurance costs are a market-wide issue, not unique to a specific dealer—boosting trust.

Don’t Forget Fixed Ops

While most focus is on the sale, Hartfiel says fixed ops must also adopt a customer-first approach. Transparent communication and protection products like service contracts are increasingly crucial as repair costs rise alongside insurance rates.

Today’s consumers want more than a transaction. “They want someone to walk them through their options, Jordan says. “They don’t want high-pressure tactics – they want advice.”

Hartfiel agrees, noting buyers often visit just one or two dealerships. “If a customer is standing in your showroom, odds are they’re serious,” Jordan says. “It’s your job to make their experience exceptional.”

Set the Stage Early – Online

Industry experts say transparency must begin online. “Today’s customer spends nearly 18 hours researching before a purchase,” Hartfiel says. “They want information upfront, and dealers who meet that expectation will see better outcomes.”

As affordability challenges reshape the path to purchase, the message from JM&A and Open Lending is clear: customers want trusted guidance, and dealers who deliver it will win.

Moving to a consultant mode is one reason Findlay Automotive Group leaders opted to discontinue their ownership and operation of an Allstate Insurance agency.

“We got out of that business because being tied to one insurance company subjected us to the whims of Allstate on underwriting. Sometimes they would approve most customers, and other times they were very restrictive,” says Corder. “Now we just have relationships with various insurance agencies whereby we can refer customers to get (the most reasonable) quotes.”