Failing an insight check means you can't tell if the other party is lying, it doesn't mean you believe them. Passive insight should be used any time NPCs are lying to the PCs, otherwise it slows the game down immensely with players asking for insight checks every time anyone tells them anything.
If NPCs can use Deception against PCs, why not Persuasion?
They absolutely can, but in order to give players information, not to force their decisions. If players call for an Insight check and the NPC is telling the truth, I roll Persuasion. If the Persuasion is too low, then I tell the players the same as the result of a failed Insight check against Deception: "You're not sure."
Failing an insight check means you can't tell if the other party is lying, it doesn't mean you believe them. Passive insight should be used any time NPCs are lying to the PCs, otherwise it slows the game down immensely with players asking for insight checks every time anyone tells them anything.
Using passive insight means that the DM needs to make a deception roll every time an NPC lies to the PCs. It also leads to it being completely impossible for any NPC to maintain any kind of pretence without a massively high deception score. It's like requiring 5 PCs to all make DC15 stealth check without group stealth, and making one failure a fail for the group: even with +10 stealth for all PCs, one of them will probably fail. If you make constant rolls, you will get 1s and 2s, practically guaranteeing failure.
Let's assume a PC with a modest +1 Wisdom modifier, and any NPC with +1 to Charisma (Deception) checks. The NPC is likely to get busted automatically, with no decision making or thought by the PC, the either the first or second time they say something untrue. They will rarely manage 4 lies. 8 lies is highly unlikely. Even if you use some kind of "once per few minutes" system over individual lies, to do something as simple as pretend to be an ordinary wagon driver and take the PCs on a simple trip along the road, the PCs will undoubtedly figure out that they're being led into a trap within a few minutes. They won't know how they know this, they won't know why it's a lie, but they'll suddenly change their course of action for no reason. If you start adding bonuses for how convincing the lie is, you might as well auto pass them, ergo no check.
If you use this, essentially NPCs just can't deceive PCs, no matter how plausible the situation or deception is. Moreover, when the castellan says "Come right this way, the master is expecting you for dinner" and the PCs are utterly unaware as he leads them into a trap, you'd actually have the PCs auto-detect that it's a trap? And roll a Deception check for the NPC for just saying it? That approach to the game is baffling to me.
DM'ing can take a lot of skill in acting, clue dropping and you'll have a better game if you consider "how will this lying NPC mess up?"
If NPCs can use Deception against PCs, why not Persuasion?
In terms of slow down, I've never encountered players constantly asking for insight checks. If they do and it's weird, ask them why they want to make the roll. No reasonable reason? No roll, just like any other ability check.
There is no auto-detect, the npc has to roll for it, that makes it not automatic. The PCs detect it without any action from the player, but that doesn't mean it's without any action from the character. The characters are in the world and have the opportunity to directly observe the characters lying to them, why should they have to depend on the player's ability to insight check the DM?
If your problem is the plausibility of lies, that's a problem that applies equally to the PCs lying to NPCs. Give a bonus/penalty or adv/disad for particularly believable or unbelievable lies.
As for never having slow downs, have you ever told your players outright that their insight doesn't apply in any situations unless they explicitly ask for a check?
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They absolutely can, but in order to give players information, not to force their decisions. If players call for an Insight check and the NPC is telling the truth, I roll Persuasion. If the Persuasion is too low, then I tell the players the same as the result of a failed Insight check against Deception: "You're not sure."
There is no auto-detect, the npc has to roll for it, that makes it not automatic. The PCs detect it without any action from the player, but that doesn't mean it's without any action from the character. The characters are in the world and have the opportunity to directly observe the characters lying to them, why should they have to depend on the player's ability to insight check the DM?
If your problem is the plausibility of lies, that's a problem that applies equally to the PCs lying to NPCs. Give a bonus/penalty or adv/disad for particularly believable or unbelievable lies.
As for never having slow downs, have you ever told your players outright that their insight doesn't apply in any situations unless they explicitly ask for a check?