The sales incentive, launched July 6 for a two-month test, covers sales or leases of Chevrolet, Buick, GMC and Cadillac cars. It could be expanded to other states if it helps move enough vehicles off the lot.
But independent insurance agents, already under siege from online brokers, see the pilot program as another attack on their wallets and hint darkly that it must be violating some rules.
"Our concern: Insurance is not a commodity like floor mats," declared PIA Western Alliance, a trade group of independent agents and companies in nine Western states. "Worse, the program is an incentive that takes income away from independent insurance agents."
GM says the policy, from MetLife Auto & Home, covers liability and physical damage at levels above the minimum requirements in both states, and it has a kicker: If the car is totaled within the first year or 15,000 miles, a "vehicle buyback" clause will replace it with a new one without deducting for depreciation, the company says.
The automaker, battling back from its bout with bankruptcy, says this is the first time any U.S. car company has made such an offer across its full line of vehicles.
It picked Washington and Oregon for the test run because "traditionally they have not been great markets for us, so we see opportunity there," says GM spokesman Tom Henderson in Detroit. "We want to get on people's consideration radar."
It's too early for any hard data, he says, but "the early indication is consumers are reacting favorably, and we're having very few people decline."
The independent insurance agents, however, are not happy.
Calling the program "disturbing," the regional PIA group issued a statement questioning whether consumers will get the best insurance advice on the showroom floor.
It suggested that the program goes against state insurance regulations that forbid providing rebates or gifts for buying a policy, calling the incentive "a violation, at least in spirit, of the insurance regulations of many states."
The state Office of the Insurance Commissioner, however, says GM's deal is legitimate.
"It's legal," says spokeswoman Stephanie Marquis. "It's definitely innovative, but there was nothing in state law that prevented it from being approved."
She says insurance agents are forbidden from offering incentives to policy buyers. But as GM has structured its program, the company buys a group policy from MetLife, and then enrolls members in the covered group.
PIA claims GM has received regulatory approval to offer the deal in 17 states. Henderson says he can't say yet whether GM will roll the program out elsewhere.