Tariffs will increase car insurance costs faster, analysis finds
FILE - Traffic on Interstate 80 in Crockett, California, in 2022. Photographer: David Paul Morris/Bloomberg via Getty Images
With the implementation of President Donald Trump’s various tariffs, car insurance prices are another perhaps unexpected cost that could increase.
The U.S. relies on some auto parts from neighboring countries, and a 25% tariffs on steel and aluminum has also been implemented.
RELATED: Trump's 25% tariffs on all steel and aluminum imports take effect
Car insurance premiums increasing
The backstory:
Car insurance rates are already heavily increasing, with various reports showing a 15% - 26% increase in 2024.
Regardless of tariffs, rates were expected to continue increasing throughout 2025, but tariffs are expected to greater drive the increase - and quicker.
By the numbers:
Insurify, an insurance comparison company, projected the cost of rising insurance with and without tariffs:
- Tariffs could help raise the projected average annual cost of car insurance in the U.S. by 8% in 2025, from $2,313 to $2,502.
- The average cost of full-coverage car insurance would rise 5% without tariffs, to $2,435.
Dig deeper:
Insurify’s analysis was done in mid-February, before Trump announced additional tariffs on steel and aluminum, so these projected increases have the potential to be even greater.
The other side:
Without tariffs, Insurify projected car insurance costs would increase by 5% year-over-year.
Car insurance prices by state
Dig deeper:
With tariffs, rates are expected to increase in every state, based on Insurify’s estimate of a national 3% overall increase. That is on top of the average projected annual increase of 5%.
This is where full-coverage car insurance rates will be highest after the projected 8% increase, due to tariffs:
The Source: Information in this article was taken from Insurify, a insurance comparison company. Insurify based its projection for premium increases on estimates that the U.S. imports 32% of auto parts sold domestically from Canada and Mexico, that parts account for about 60% of a repair bill, and that the cost of covering vehicle damage makes up about 60% of the price of full-coverage car insurance. This story was reported from Detroit.