Installment Sellers May Not Influence A Car Buyer’s Decision on Auto Insurance
The Motor Vehicle Sales Finance Act (MVSFA) has rules against directly or indirectly recommending a particular company/agent to customers who may ask about auto insurance.
Section16(a) of the MVSFA permits an installment seller (i.e. dealer) to require a buyer of a motor vehicle under an installment sales contract to provide insurance on the motor vehicle, at the buyer’s expense. This is referring to auto insurance for the protection of the installment seller or subsequent holder against substantial risk of damage, destruction, or theft of the motor vehicle. (A standard auto insurance policy.)
The law states that no “installment seller shall coerce, threaten, or in any way influence any installment buyer to purchase insurance from any insurance company, agent or broker designated by such seller.”
Simply stated, a dealer may not have an arrangement with an insurance agency that could influence or steer a buyer towards a certain insurance company, agent, or broker. This includes direct contact, pamphlets, offering on-site kiosks, or applications for auto insurance, etc.
Additionally, the MVSFA prohibits an installment seller from receiving from any insurance company, agent, or broker, any portion of an insurance premium involved in the retail installment sale of a motor vehicle.
DIFS covers this topic in more detail on its website. Please see: Motor Vehicle Sales Finance Act FAQ
Reviewed 06/2025
