VW To Offer Free Insurance Incentive

VW To Offer Free Insurance Incentive

By Steve Tuckey

NU Online News Service, Jan. 3, 2:45 p.m. EST?A Long Island insurance think-tank has licensed Volkswagen of America Inc. to offer the industry's first no-charge insurance policy to customers who purchase or lease selected models during a three-month test in Illinois and Wisconsin.[@@]

Unlike traditional rebates or low-interest incentives offered by other automakers, the insurance process has patents pending, ensuring that it will remain exclusive to Volkswagen of America during the pilot.

Volkswagen will pay the premiums based on a new insurance model.

Nationwide subsidiaries in Illinois and Wisconsin will underwrite the insurance during the promotion.

Creative Innovators of Bethpage, N.Y., devised the insurance plan that bases risk on the car model rather than a driver's profile.

Volkswagen will offer the incentive from Jan. 4 to March 31, 2005 on the new 2004 and 2005 Golf, New Beetle and New Beetle Convertible. To qualify, residents of those two states must be licensed in Illinois or Wisconsin. The policy is for 12 months.

All drivers will qualify regardless of driving record, said Creative Innovators spokesperson Kathleen Hamilton.

Bob Kurilko, vice president of the independent car Web site, Edmunds.com, said traditional cash incentives have the effect of accelerating depreciation.

"What a consumer gets in an upfront discount is taken away in part at trade-in time," Mr. Kurilko said.

Unlike zero-percent financing programs, the incentive benefits every customer of the three models. About 70 percent of new-car shoppers do not qualify for zero-percent financing, according to Edmunds.com research.

Volkswagen of America spokesperson Tony Fouladpour said local radio and print advertising will promote the program, which could go national depending on the response.

"We are just testing the waters to see how this promotion compares with others and whether or not it brings in more traffic to the dealership," he said.