Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 19, 2021

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What do these three seemingly unrelated things have in common? They are all now available to you at car dealerships across the nation.

It goes without saying that the free donut is a good deal, but make sure you shop around before purchasing that new car or the Allstate insurance coverage!

There is always a price for convenience and that may be the case here when it comes to the insurance portion of this deal.

Early this month, Allstate Insurance announced that car dealerships nationwide now have the opportunity to open full-service Allstate insurance agencies right on their lot – where states allow this sort of thing.

Allstate previously launched a pilot program two years ago in 11 dealerships across the states of Arizona, Florida, Idaho, Illinois, Kentucky, Louisiana, Nevada, New York, Texas and Utah.

Why Insurance in Car Dealerships?

The obvious answer is that’s where new cars are being sold. And where there are new cars, there are new car insurance needs.

Additionally, there is usually a waiting period between picking your car and driving it off the lot, which is where Allstate comes into the picture. You’re usually waiting for the finance paperwork to come through, so why not talk to an insurance agent about coverage while you’re there?

You’re already in the buying mood and have likely just agreed to a 5-7 year loan for several thousands of dollars and you’re credit has already been run. Your insurance score, somewhat similar to a Fico score, plays a big role in the overall cost of your insurance premium, and you’re clearly not deficient in that area if your car lease or loan just got approved.

This might just be the prime time for Allstate to get you to sign on the dotted line for insurance coverage…while you are still in that euphoric, “new car smell” state of mind.

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Does This Work For You?

Maybe, maybe not. Hopefully you have done your due diligence on the car you’re buying.

While there may not be much of a difference in the cost of a car between dealerships, there can CERTAINLY be a vast difference in car insurance premiums between insurers.

As we always say, it is highly recommended that you shop for car insurance quotes online and/or with an independent insurance agent BEFORE you arrive at the dealership.

Bottom line; don’t buy the rust proofing package, extended warranty, or the first insurance policy thrown in your face when buying your car!

[What is full coverage auto insurance?]

Something to Consider – Gap Coverage

While we don’t have all the details on the agreement between Allstate and the car dealership, expect both companies to offer up GAP coverage for your new ride.

GAP coverage can be purchased as part of a finance agreement (your car loan) or from an insurer. Keep in mind that it is typically several-hundred dollars cheaper if purchased from your car insurance company.

Our guess is that Allstate has agreed not to “push” this coverage as part of your auto policy if purchased on the dealer lot, as the finance company would lose a lot of money if they allowed Allstate to offer it to you instead.

[Gap coverage vs. new car replacement]

Which Dealerships Are Involved?

You will probably only see Allstate in “top of the line” dealerships, as their auto insurance products are designed for those of us who fit into the standard insurance market.

Ultimately, Allstate’s auto insurance is not designed for individuals with less than perfect credit or C.L.U.E. report or MVR activity on their driving records.

Even the Allstate Value Plan, which is designed for those of us on the lower end of the income scale, is not geared towards drivers they believe will cost them money in the long run.

[How do insurance companies make money?]

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Final Word

If Allstate offers the car insurance coverage you need at a reasonable premium…GO FOR IT. Just be sure to shop your rates online or with an independent insurance agent before arriving at the dealership and sitting down with one of their agents.

Allstate spends a lot of money on advertising, which has to be paid by somebody (their policyholders).

So make sure your premium dollars aren’t going toward attracting new customers for them.

There are plenty of reputable insurers who don’t waste as much money on advertising, and as a result, can offer the same coverage for substantially less money.

Tip: 10 ways to lower your car insurance premium.

(photo: Amy Loves Yah)