After years of increases, auto insurance policyholders have seen a relative break in the recent cycle, with average full-coverage premiums falling roughly 6% in 2025. However, this calm may not last, as the impact of tariffs imposed on imported vehicles, auto parts, steel, and aluminum could begin filtering through the insurance system in the coming months.
Tariff Impact on Insurance Rates
A growing body of industry analysis suggests that tariffs could push premiums higher than previously expected. Insurify projects that the average annual cost of full-coverage car insurance will rise about 1% in 2026, but if tariffs significantly increase vehicle repair and replacement costs, Insurify estimates premiums could rise about 4%.
According to Saleh Taebi, founder and CEO at USAWheels, “While auto insurance rates have not yet fully reflected the impact of tariffs, the underlying cost pressures are already building throughout the automotive supply chain. Insurance claims are ultimately tied to repair costs. If replacement parts, wheels, tires, sensors, electronics, and other vehicle components become more expensive, the cost of repairing damaged vehicles rises as well.”
Industry Experts Weigh In
Josh Katz, CPA and founder of Universal Tax Professionals, said, “The tariff math worries me more than the 8% headline suggests. That number assumes a clean pass-through. But parts inflation tends to compound. Repair costs go up, claims get more expensive, and insurers price that risk forward. So consumers can see the hit before the tariff even fully lands, which is part of why rates feel jumpy.”
Tom Firestine, founder of Longmeadow Insurance, added, “The tariff situation is the next wave. An 8% average increase attributable to the 25% auto tariffs sounds manageable until you layer it on top of baseline increases that haven’t stopped. Customers on the North Shore who renewed last spring at a 6% increase are going to face another 10% or more when tariff-driven parts costs work through the system. These things don’t average out. They compound.”
Experts recommend that consumers take steps to limit the impact of future premium increases, such as shopping rates annually, increasing deductibles if financially feasible, taking advantage of bundling discounts, maintaining continuous coverage, and asking about telematics and safe-driver programs.
Original reporting: KTBS 3 (Shreveport) — read the source article.
