The answer - It depends on when the savings are harvested.
If you’re in the position to make a large purchase, for which the exact unit/model/design has yet to be determined, how do you know how much to set aside for the cost of insurance? Sure, you could throw out a ballpark guess, but the most common answer has been; you don’t know. In our experience, there are two main reasons for this:
1) Most retailers, due to regulatory burdens and/or disruption to ongoing operations, do not attempt to double or moonlight as licensed insurance agencies and 2) A little over half of all vehicles are purchased via the “walk-in” method. The “walk-in” segment represents the impulse shopper and logic follows that if the impulse buyer is not quite sure yet what they want to buy, it is also very unlikely that they, prior to arriving at the dealership, have made insurance arrangements, or have checked to see what the insurance rates might be for their potential and undetermined purchase.
As a result, most people delay the insurance requirement/process until after the purchase. This is due to the fact that consumers are provided some leeway under safe harbor reporting provisions under the personal auto policy, which generally allow the insured to purchase first and handle insurance second e.g. generally speaking, and dependent on the particular state, the insured has 14-30 days to report a new auto to the insurer.
Perhaps a bit ironically, and in an effort to convince customers to shop more, insurance companies continuously run commercials begging customers to spend a few minutes to save money on insurance. The truth of the matter, however, is that these insurance savings are almost always on the table. In practice, though, it is not very often where obtaining these known savings become enough of a priority in order to motivate a customer to actually get a quote. Furthermore, and according to an article on CNBC.com, customers who comparison shop their vehicle insurance, save more than $400. This $400, in and of itself, might not be enough to motivate someone to get an insurance quote. Although, when that $400 in savings gets extrapolated out via monthly payment, the buying power could be enough to finally compel the customer to get a quote. In fact, an insurance quote could be the difference between a yes or a no. Therefore, the timing of when this buying power is realized becomes critical as it can directly impact affordability, especially when the retailer is tasked with fitting a product to a monthly payment.
As mentioned above, this insurance cost variable, if harvested at the dealership, can translate into buying power. However, if the customer does not realize the savings until after they left the dealership, the aforementioned buying power evaporates, at least from the dealership’s perspective.