Car Insurance Premiums Are Set To Go Through The Roof Soon Due To Trump's Auto Tariffs

Tariffs on fully assembled cars and auto parts are poised to drive up both vehicle prices and repair costs. As insurers face rising claim payouts, policyholders can expect to shoulder the burden through higher premiums. Most experts agree it's only a matter of time before customers see these effects on their bills.

Tariffs Set The Wheels In Motion

President Donald Trump's 25% tariff on foreign cars went into effect on April 3, while tariffs on certain auto parts begin May 3. According to a report by Yahoo Finance, auto insurers typically increase premiums when they anticipate bigger claim payouts, and pricier parts or vehicles almost always translate into more expensive claims.

Repairs Get Costlier and Slower

Because a vast share of auto parts are imported, fixing a damaged car might now cost more. Longer wait times for replacement parts could also boost rental car bills, nudging insurers to raise rates accordingly. In addition, more vehicles could be declared total losses if the cost of parts soars, leading to higher payouts and higher premiums.

See also: Goldman Sachs Hits The Brakes: Auto Tariffs & Slumping Demand May Shake Up Ford, Tesla, Rivian, Lear & Visteon

When Will Rates Rise?

Industry analysts say you might not see the impact for 12 to 18 months. Insurance companies generally wait to gather enough data before filing rate changes, and regulatory approvals can take time. Some drivers could escape initial hikes if they're mid-policy, but once renewals roll around, the clock runs out.

Steps to Stay Ahead

You can't control tariffs, but you can keep your insurance costs in check. Review your coverage annually. Verify that you have adequate liability limits, consider increasing deductibles if you can handle the potential out-of-pocket expense, and ask your insurer about every discount you might qualify for. Shopping around is also smart — an independent agent can compare quotes from several carriers to find potential savings.

Image via Shutterstock

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.