Insurance Agents Boosted by Clunker Sales

HIGH POINT -- Most consumers who sped off of dealership lots in new vehicles thanks to the Cash for Clunkers government rebate incentive also drove away with something else -- a more expensive automobile insurance policy.

The Car Allowance Rebate System spurred the sale of about 700,000 new cars nationwide after drivers traded in their older, gas guzzlers for new, more fuel-efficient vehicles.

Local insurance agents say the new cars require more coverage, and their customer traffic began to increase when the program went into effect on July 27 until it ended on Aug. 24.

"We've seen an increase in traffic, and we've talked to several Cash for Clunker customers," said Wilson Brown with Nationwide Insurance at 405 N. Elm St. "A lot of people have added comprehensive and collision coverage to their policies (after purchasing new cars)."

Because most "clunkers" were older vehicles that had been paid for, many customers who participated in the program were only covered by liability insurance, or coverage that is offered for bodily injury or property damage for which the insured driver is deemed responsible. A new car bought through a loan or lease, however, is required by most lenders to have collision coverage that pays for the insured driver's vehicle if they are involved in an accident.

"People are trading a lot of older cars that only had liability, and, since they're buying new cars, they're adding to their policies," said James Whitley, with Morton Whitley Insurance at 2610 N. Main St. "It has created activity and increased premiums."

Whitley said customers also had visited the agency before going to the dealership to determine if they could afford the new policies.

Dewey Beckner, an agent with Allstate Insurance Co., said it's impossible to know how much the average Cash for Clunkers customer increased their car insurance payments because it depends on how many vehicles are attached to the policy, but the program still stirred some new business.

"We were disappointed that we didn't get a single new policy from the program, and it was just people who already had insurance adding on," he said. "But there were a lot of good things about the program."

The Associated Press contributed to this article.