Insurance agency Insurify predicts that new tariffs implemented and proposed by President Donald Trump would make car insurance more expensive. By increasing the cost of importing cars and auto parts to the States from Canada and Mexico, new tariffs would also make car insurance more expensive by extension.
“As the price of replacement parts increases, premiums will have to increase accordingly,” said Daniel Lucas, carrier relations manager at Insurify.
Insurify’s projection for the annual cost of full coverage car insurance in 2025 is $2,435 without new tariffs and $2,502 with new tariffs, a 2.7-percent difference. For reference, Insurify’s data shows a 47-percent increase in the cost of car insurance from 2021 to 2024.
The study also breaks down projected changes to insurance costs by state. Most of the projected changes with tariffs are around 3 percent, reflecting the projected national average. The states that could face insurance cost increases of 10 percent or more with new tariffs are Delaware, Florida, Georgia, Nevada, and New York.
So, what exactly would the process look like for tariffs making car insurance more expensive? “It will take some time for that cost to work through the system,” Andrew Whitman, professor of finance at the University of Minnesota, told Insurify. “Insurance companies have to file for rate increases, and those rate increases have to be based on increased claim costs.”
Of course, these things are hard to make predictions about when no one really knows what the near future holds when it comes to global trade and its costs. “There’s uncertainty over whether these tariffs are going to stick. I think insurers are going to have a tough time … until there’s confidence these tariffs will be an ongoing phenomenon,” David Marlett, a professor of insurance at Appalachian State University, told Insurify.
Insurify also predicts that Trump tariffs could increase the average cost of auto repairs by five percent. Further, it echoes a prediction from Wolfe Research that says the average new car transaction price could rise by as much as $3,000 with new tariffs.
