Retail giant Coles announced on Tuesday that it would start selling car insurance, which the company described as a product carrying flexible coverage with a lifetime guarantee on auto repairs by authorised motor vehicle repair outlets.

Largely sponsored by the retailer's parent company, Wesfarmers Ltd (ASX: WES), Coles said that Coles Car Insurance is a customised insurance product from which clients can build personalised coverage by handpicking the options that matter to them.

Coles chief financial officer Tony Buffin said that customers buying the insurance would also enjoy standard and flexible options on their coverage, adding that "those taking out comprehensive cover would have their groceries insured if they were damaged in any car accident."

Wesfarmers managing director Robert Scott said that Coles' new insurance offerings effectively paved the way for the company's entry into mass market insurance coverage as he noted that Wesfarmers is currently regarded as major insurer of motor fleets.

Mr Scott told AAP that Coles insurance product will not be packaged as the cheapest insurance in the market though he emphasised that the coverage is "very competitively priced but it will offer great value and quality."

He said that the product is specifically fine-tuned for Coles' traditional customers, catering to their gravitation towards great value and quality products.

Wesfarmers revealed on Monday that sales on its Coles supermarket business jumped by 4.3 percent, pointing to its new product as the large contributor, adding that by Tuesday, company shares were already trading at $30.36 cents, with gains of up to 28 cents.