Your new vehicle may already be tracking how you drive, and regulators are paying close attention
October 28, 2026
The next time you buy a car, you may be offered insurance before you leave the dealership. And more than a third (36%) of recent car insurance shoppers say they're interested in buying insurance directly through a car dealer or manufacturer, according to J.D. Power's 2026 U.S. Insurance Shopping Study. Interest is highest among younger drivers.
So, why are automakers moving into insurance? Many modern cars already collect detailed data on how they're driven. While that data can help price a policy, its use has also drawn scrutiny from federal and state regulators.
There’s nothing inherently wrong with buying auto insurance through an automaker, but you should look beyond the convenience of the vehicle and insurance purchase in one place and explore all your options.
Here's what to know about how automaker insurance works, what your car may be sharing about you, and how to tell whether an automaker's offer is a good deal.
Automaker car insurance, sometimes called embedded insurance, is coverage offered by a vehicle manufacturer or its dealers as part of the car-buying or ownership experience. Instead of shopping for a policy separately, you can purchase coverage directly through the automaker or dealership.
Buying auto insurance through your vehicle manufacturer or dealer is not a new concept. Several automakers, including Toyota, have offered insurance options to customers for many years. In most cases, the manufacturer is not acting as the insurance company itself. Instead, it is creating an affiliated business or brokerage relationship designed to provide insurance products while generating an additional recurring revenue stream.
Automaker auto coverage typically works one of two ways:
The automaker partners with an insurer. Many manufacturers work with established insurance companies to offer coverage at the point of sale or through the car's app. The insurer underwrites the policy and handles claims, while the automaker provides the sales channel and sometimes the driving data.
The automaker runs its own insurance business. Tesla, for example, sells policies through its own insurance companies, and General Motors offers GM Insurance. These programs can use data collected by the car itself to help set your rate. GM's program, for example, uses connected-vehicle technology to personalize rates and lets customers add non-GM vehicles to the same policy.
Either way, it’s still standard car insurance that must meet your state’s requirements. The main differences are who sells the policy and how the price is determined, including how your vehicle’s data factors into the cost.
J.D. Power's 2026 study, based on 12,437 customers who requested at least one competing auto insurance quote in the previous six months, found that 36% of recent shoppers are interested in embedded insurance sold by a dealer or manufacturer. The study was fielded from January 2025 through January 2026.
That interest comes as other parts of the car insurance shopping process are changing, too. Here’s how:
Shoppers are comparing more options. Customers now receive an average of 3.5 quotes, the highest level in the study's 20-year history.
Buying has moved online. 48% of new auto policies are purchased digitally, up from 36% five years ago.
Pricing based on driving data is mainstream. Usage-based insurance is used by 20% of all customers, 30% of recent shoppers and 34% of those who bought from a new insurer. Among recent shoppers, 44% say usage-based insurance was important in their shopping process.
For more details on how shopping behavior is changing, see our look at auto insurance shopping trends for 2026.
Many new cars are connected to the internet and record information such as speed, braking, acceleration and location. As a result, many automaker insurance programs use this data directly, without the plug-in device or phone app that traditional usage-based programs often require.
The convenience of buying insurance through your automaker also raises questions about how your driving data is collected and used. That issue has become a major consumer concern. In January 2026, the FTC finalized an order against General Motors and OnStar over allegations that they collected and sold drivers' precise location and driving-behavior data from millions of vehicles without adequately notifying drivers or getting their consent. According to the FTC, GM collected the data through its OnStar Smart Driver feature and sold it to third parties, including consumer reporting agencies that supply information to insurers.
Under the final order:
GM is banned for five years from sharing drivers' geolocation and driving-behavior data with consumer reporting agencies.
For the order's 20-year term, GM must get drivers' affirmative express consent before collecting, using or sharing connected-vehicle data, with limited exceptions such as providing location data to emergency responders.
GM must let drivers request a copy of their data, ask for it to be deleted and opt out of data collection.
State officials have also taken action. For example, Texas Attorney General Ken Paxton sued GM over its collection and sale of driving data. In January 2025, he also sued Allstate and its data analytics subsidiary, Arity, alleging they collected location and driving data through software embedded in mobile apps without consumers' knowledge and used it to justify raising insurance rates. Allstate has said its data practices comply with the law.
None of this means connected-car data always works against you. Safe drivers can benefit when a policy is priced on how they actually drive. The key is to understand what data is collected, who can access it and what you agreed to when you purchased the vehicle.
Insurance is regulated at the state level, so automaker programs must meet each state's rules and filing requirements before they can be sold there. That can make it harder for automakers to roll out insurance nationwide.
In 2026, the New York Department of Financial Services rejected Tesla's proposed personal auto insurance program. Regulators objected to an eligibility structure built around Tesla vehicles, whose driving data the insurer receives directly through Tesla's connected-car technology, rather than a product open to a broader range of vehicles.
The decision came as Tesla's insurance business was growing: its insurance entities wrote $644.2 million in direct premiums in the first half of 2026, according to S&P Global Market Intelligence data reported by InsuranceNewsNet.
The National Association of Insurance Commissioners (NAIC) has also identified connected-car technology as a growing part of usage-based insurance, as insurers and automakers gain access to more driving data. That means state regulators are likely to keep examining how these programs set prices and who can buy them.
There's no independent, nationwide data showing whether automaker insurance is cheaper or more expensive than coverage from a traditional insurer. Whether it's a good deal depends on your driving, your vehicle, and your state. Here's a look at the potential upsides and downsides:
Potential advantages | Potential drawbacks |
|---|---|
Convenient to buy at the same time as the car | Your rate may depend heavily on data your car collects |
Uses the car's built-in technology, so no extra device is needed | Some programs are limited to the automaker's own vehicles or are only available in certain states |
Safe, low-mileage drivers may get a rate that reflects how they actually drive | Hard braking, speeding or late-night trips may count against you |
Can be managed in the same app you use for the vehicle | May not offer the bundling discounts you'd get by insuring your home and car with one company |
Bundling is another factor to consider. J.D. Power found that 45% of recent auto shoppers have a homeowners policy, but only 20% received a homeowners quote while shopping for car insurance. If you normally bundle your home and auto coverage, compare the automaker's price with a bundled quote rather than a standalone car insurance quote.
According to Stamps, bundling is often the most effective way to maximize both savings and protection.
“Many insurance carriers offer significant multi-policy discounts when customers place their auto, home, renters, umbrella, and other insurance policies with the same company. In addition to the potential cost savings, bundling can provide broader coverage options, streamlined policy management, and a more coordinated claims experience,” Stamps explains.
Our guide to multi-policy discounts explains how much bundling can matter.
“Remember that convenience shouldn't replace comparison. Taking time to review the coverage and compare it with other options can help ensure the policy fits your needs and budget,” explains Galbreath.
If you're offered insurance at the dealership or through your car's app, treat it like any other quote:
Get at least two other quotes for the same coverage. Match the liability limits, deductibles and add-ons exactly, so you're comparing prices rather than coverage. You don't have to buy insurance from the dealer to drive the car home. You just need valid coverage from a licensed insurer.
Ask exactly what data is collected and how it's used. Find out whether your rate can go up based on your driving data, how often it's reassessed and whether the data is shared with anyone else.
Review the consent settings. Data-sharing permissions are often set during vehicle setup or in the app. Check them, and change them if you're not comfortable.
Check who handles claims. Find out whether the automaker or a partner insurer pays claims, and look up that company's complaint record with your state insurance department.
Ask what happens if you sell the car or switch brands. Some programs are tied to the vehicle or brand, which matters if you plan to change cars in a few years.
Look at usage-based options from traditional insurers, too. Many insurers offer their own programs that price coverage on your driving, usually through an app. See how usage-based car insurance can affect your rates and our guide to pay-per-mile car insurance.
Don’t overlook advance quote discounts. Many insurance companies offer an advance quote discount when coverage is arranged before the vehicle purchase is finalized. According to Stamps, it can often reduce premiums by 10% to 20%. “If you wait until you’re at the dealership and need immediate coverage to complete the transaction, you might not qualify for this discount, resulting in a higher premium,” Stamps explains.
Whatever you do, take your time and don’t rush when deciding on auto insurance coverage.
Car dealerships and vehicle manufacturers are increasingly looking for opportunities to participate in recurring revenue streams, even though the vehicle sale itself is typically a one-time transaction.
“As a result, dealership staff may be incentivized to present insurance products during the purchasing process and encourage consumers to make an immediate decision,” Stamps explains.
If you drive an electric vehicle, our guide to electric car insurance covers cost factors specific to EVs.
This article draws on J.D. Power's 2026 U.S. Insurance Shopping Study, released June 4, 2026. The study is based on responses from 12,437 insurance customers who requested an auto insurance quote from at least one competing insurer in the previous six months, and it was fielded from January 2025 through January 2026. J.D. Power is a commercial research firm, so we paired its survey findings with government and regulatory sources: the FTC's final order against General Motors and OnStar, the Texas Attorney General's lawsuits over driving data, and reporting on the New York Department of Financial Services' review of Tesla's insurance filing.
Not necessarily. There's no independent data showing automaker insurance is consistently cheaper. Some drivers may get a lower rate if their driving data shows safe habits, but the only way to know is to compare the automaker's quote with quotes from other insurers for the same coverage.
No. You need proof of valid insurance to drive a car off the lot, and your lender may require certain coverage if you finance, but you can buy that coverage from any licensed insurer.
It can, if you enroll in a program that uses it. Usage-based and connected-car programs may reward safe driving, but hard braking, speeding or frequent late-night driving can lead to a higher rate with some programs. Ask how a program uses your data before you sign up.
Embedded insurance is coverage offered as part of another purchase, such as buying a car. For auto insurance, it usually means a policy sold by the automaker or dealer, either through the automaker's own insurance business or through a partner insurer.
Start with your vehicle's privacy settings and the manufacturer's app, where many data-sharing features can be turned off. Under the FTC's January 2026 order, GM must let drivers opt out of data collection and request deletion of their data. Other automakers' options vary, so check their privacy policies.
Buying car insurance from your automaker can be convenient, and drivers with safe habits may benefit from a policy priced on how they actually drive. But the price can depend on data your car collects, programs vary by state, and there's no evidence they're cheaper across the board. Before you say yes at the dealership, check what data you're sharing, compare quotes for the same coverage, and make sure you're not giving up bundling savings you'd get elsewhere.
Anna Baluch is an insurance and finance expert at BestMoney.com. With over a decade of writing experience, she specializes in insurance, banking, mortgages, personal loans, and retirement planning. Her work has been featured in publications like Forbes, Newsweek, Fox Business, Credit Karma, Insurify, and Realtor.com. Anna holds a bachelor’s in marketing from Northwood University and an MBA from Roosevelt University. Her goal is to empower consumers to make smart financial decisions.
