GM to offer free car insurance

July 6, 2011: 1:27 PM ET
General Motors hopes to spur sales of cars like the new Buick Regal by offering buyers in two states a year of free auto insurance.

General Motors hopes to spur sales of cars like the new Buick Regal by offering buyers in two states a year of free auto insurance.

NEW YORK (CNNMoney) -- To spur sales, General Motors is offering a year's worth of car insurance along with any new GM car purchased in the states of Washington or Oregon.

The insurance coverage is offered "at no additional cost," according to GM (GM, Fortune 500). and will be provided by MetLife Auto & Home.

"We want to give residents of Oregon and Washington another reason to discover Chevrolet, Buick, GMC and Cadillac vehicles," said Chris Perry, U.S. vice president of General Motors Marketing.

The insurance -- part of a marketing test that will run through Sept. 6 -- includes both liability and physical damage coverage, GM said, and exceeds the minimum requirements in the two states.

Oregon and Washington were chosen for the program because GM hasn't been gaining market share in those states as quickly as it would like, GM spokesman Tom Henderson said. If the program is successful there, it could be moved out to other parts of the nation, he said.

GM's sales are up 11%, overall, so far this year compared to last year. Retail sales, which exclude sales to corporate fleets, are up 16%, the automaker announced Friday.

The program was created based market research indicating that many potential new car buyers found it difficult to afford insurance for a new vehicle, Henderson said.

Customers are free to decline the insurance coverage, Henderson said, but that would not change the price of the car.

The insurance covers the owner and anyone who drives the car with the owners permission. After the year is up, the owner can either renew the policy or find other insurance.

Under MetLife's insurance program, if the car is declared a total loss within the first year or 15,000 miles, the car will be replaced or repaired without a deductible.

Perry and GM's head of global marketing, Joel Ewanick, previously worked for Hyundai. While there, they were credited with creating the "Hyundai Assurance" program under which Hyundai buyers were allowed to return the car at no cost if they suffered a job loss within a year of buying it. That program ended earlier this year. To top of page

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