Wal-Mart's latest target: Auto insurance


With a reputation for passing savings along to consumers, Wal-Mart has long been known for slashing prices on apparel, electronics—and car insurance?

On Wednesday, the world's largest retailer announced a new marketing partnership with, a comparison website that helps drivers choose coverage and rates for automobile insurance.

Through the site, drivers in eight states can now compare and purchase auto insurance policies offered by Progressive, , Esurance, 21st Century Insurance, The General Insurance and Safeco Insurance on In the coming months, drivers nationwide will be able to log on to compare rates.

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"It's another service to help our guests save money from a monthly expense that our surveyed shoppers have said they feel they overpay for, more so than other expenses," said Daniel Eckert, senior vice president of services for Wal-Mart U.S.

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According to a survey conducted by the retailer, the average American household spends $1,530 a year on automobile insurance premiums. Wal-Mart said the tie-up with's founder Joshua Kazam was born after its shoppers expressed concerns about the complexities and costs associated with car insurance.

The website uses a model similar to those found on travel sites Expedia, Priceline or Orbitz, which allow consumers to run price comparisons on flights.

"Nearly 90 percent of people comparison shop online for products and services like airline tickets, but our survey data shows that only 1 in 5 comparison shop for auto insurance," Kazam said.

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Last year, Wal-Mart launched two concurrent pilot programs, one in Pennsylvania and one in Illinois, to test different models for the site. The pilot in Illinois tested a single-carrier model, while the pilot in Pennsylvania most closely resembled the selected business model. According to Wal-Mart, Pennsylvania drivers who purchased policies on the site during the pilot saved an average of $1,168 in annual insurance costs.

Paying for secure spending

Wal-Mart doesn't have an ownership stake in the website, but Eckert said the retailer will receive a promotional payment per store each month. The bottom of webpages has a Wal-Mart logo, and the retailer said there will be displays and signage in Wal-Mart stores and online, informing and directing shoppers to makes a commission off each new policy purchased through the site, and the insurance carriers that offer quotes on the site could benefit from new customers using the comparative tool. Because the typical Wal-Mart shopper tends to be more price-sensitive, the tool could hurt insurance carriers that aren't offering the lowest price.

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The eight states that will immediately offer are Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee and Texas.

Wal-Mart is also testing the sale of life insurance policies in its South Carolina stores.

—By CNBC's Courtney Reagan.