Car insurance rates are climbing, and there’s one major factor contributing to these increases that many people overlook—tariffs. When tariffs are placed on the companies that supply auto parts to the U.S., the cost to repair and replace cars goes up—and so do your insurance premiums.
Today, I’m going to break down why this is happening and what you can do to protect yourself.
Introduction
Hi, I’m from Trailstone Insurance, and we believe in keeping you informed about the changes that affect your coverage. Tariffs—or extra taxes on imported auto parts—are likely going to increase repair costs, used car prices, and ultimately, your insurance premiums.
Let’s take a look at how tariffs are connected to rising insurance costs and what you can do about it.
The Hidden Connection Between Tariffs and Insurance
Many people don’t realize that nearly 60% of auto replacement parts in the U.S. are imported, mainly from Mexico, Canada, and China. When tariffs are placed on these parts, the cost of those parts increases. And when it costs more to repair a car, the insurance claim payouts also increase.
Graphic animation of a chain reaction:
Tariffs → Higher repair costs → Higher claim payouts → Increased insurance rates.
Insurance companies don’t immediately raise rates in response to these changes. There’s a delay. But over time, as the cost of claims rises, insurers adjust their pricing to stay profitable—and that’s when you’ll see your premiums go up.
New Car Prices and the Used Car Boom
Tariffs don’t just affect auto repair costs; they also drive up the cost of new cars. If the price of new vehicles rises, more people turn to the used car market, which drives up both demand and prices for used cars.
Why does this matter for insurance? Because when a car is totaled, the insurance company needs to pay the actual cash value of the car. If used car prices are higher, the insurance company has to pay out more. And as always, they’ll pass those costs onto consumers.
The Lagging Effect – Why We’re Seeing the Impact Now
One tricky part about insurance pricing is the delay between cause and effect. Insurers raise rates based on ‘potential risks’. So, even though tariffs on steel, aluminum, and semiconductors may have been introduced months ago, the impact on your insurance bill won’t be fully felt until your next renewal.
That’s why we’re starting to see double-digit increases in auto insurance rates even though inflation in other areas has slowed down.
Can Anything Keep Rates Down?
So, what can you do to keep your rates down despite rising costs from tariffs? Here are a few strategies that might help:
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Shop around – Let Trailstone shop your rates with over 40 insurance carriers.
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Raise your deductible – It can lower your monthly premium, but make sure you can afford the higher deductible if you need to file a claim.
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Look for discounts – Many insurers offer safe driver or bundling discounts.
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Consider usage-based insurance – If you drive less, you might be eligible for pay-per-mile insurance plans.
At Trailstone, we work with multiple carriers to find you the best rate, regardless of what’s happening in the market.
Conclusion
Tariffs will likely make car insurance more expensive in the short term, but now you understand why. Higher repair costs, increased used car prices, and the subsequent rise in insurance premiums are all part of the chain reaction set in motion by tariffs.
If you have questions or need a free policy review, reach out to Trailstone Insurance. We’re here to help you stay protected and find the best coverage at the best price.
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