Auto Insurance Savings Alleviate Negative Equity for Car Buyers

Polly's latest quarterly report underscores the pivotal role of auto insurance savings in alleviating negative equity for car buyers, revealing that these savings can cover up to 90% of the typical negative equity balance.

Amidst a backdrop where trade-in debt nears historic levels, the Q2 2026 report sheds light on how insurance engagement can boost finance and insurance (F&I) performance in dealerships. Despite a nationwide drop in insurance rates to their lowest in nearly three years, the significance of insurance strategies remains unaffected.

The Impact of Negative Equity

Data from Edmunds highlights a concerning trend: the average negative equity for car buyers reached $6,884 in Q2 2026, setting a second-quarter record. However, there is a silver lining. By actively shopping for insurance, buyers have managed to reduce this financial burden significantly. Customers switching to Polly have reported annual savings of $1,245, enhancing their purchasing power by approximately $6,223, which aligns with 90% of their negative equity.

Benefits for Dealerships

Introducing insurance quotes during the car-buying process has proven advantageous for dealerships. Those offering insurance quotes witnessed a 20% rise in F&I gross, equating to an additional $322 per transaction. The increase was even more pronounced when customers opted to purchase the insurance, resulting in a 32% hike in F&I gross, or $523 more per transaction.

“Insurance engagement consistently enhances deal outcomes without adding friction to the process. Regardless of rate trends, dealerships incorporating insurance quoting smoothly into their sales process experience predictable results.”

Chris Pres, Vice President of Automotive, Polly

Transaction Efficiency and State-Level Trends

Contrary to initial apprehensions, providing insurance quotes does not delay transaction times. An analysis of 661,486 retail sales from 216 dealerships found that introducing Polly quotes actually hastened the process, with only 13% of deals extending beyond a week, compared to 16% without quotes.

While there's a national downward trend in median monthly insurance quotes for Q2 2026, the scenario varies significantly at the state level. In the 36 states monitored since 2021, 34 continue to experience higher insurance costs compared to five years ago, with states such as New Jersey, New York, Washington, and Tennessee witnessing particularly sharp increases.

Notable Gains in F&I Performance

Top-performing dealership partners of Polly consistently report substantial increases in F&I, with gains ranging from 7% to 62% over the past year. For example, a leading Nissan franchise in the Northeast achieved a remarkable 62% increase in back-end gross, equating to an additional $1,391 per transaction. These statistics highlight the tangible benefits of integrating insurance offerings into the sales process.

The full Q2 2026 Quarterly Embedded Auto Insurance Report is available for those seeking a comprehensive view of these market dynamics. As consumers and dealerships navigate fluctuating insurance rates, the strategic inclusion of insurance quotes remains a crucial component in optimizing financial outcomes and sustaining robust F&I performance.