Add this to your concerns about possible tariff impacts: more expensive car insurance.
New tariffs on imported cars, metals and parts announced by the Trump administration are expected to raise vehicle prices by thousands of dollars if they remain. It is also expected that the average cost of car insurance will increase as parts used in auto repairs will also become more expensive.
According to an analysis by Insurify, a comparative insurance shopping website, the average annual premium for full coverage automotive policies was just over $2,300 at the end of last year. The site initially estimates premiums will increase by just 5% this year, based on factors such as inflation and insurance company losses.
How much does customs duties have on car insurance costs?
With the addition of tariffs, the guaranteed insurance claim will increase the premium to average at least 16% ($378) to almost $2,700. The analysis includes tariffs on steel and aluminum, tariffs on imported cars, and tariffs on imported automobile parts to take effect on May 3 (the tariffs announced in February on products from Mexico and Canada are based on the president of the automatic contract, if it is in accordance with the president of the Free Trade Agreement, if it is in accordance with the President of the Free Trade Agreement, if it is in accordance with the President of the Free Trade Agreement, if it is in accordance with the President of the Free Trade Agreement, if it is in accordance with the President of the Free Trade Agreement, if it is in accordance with the President of the Free Trade Agreement, if it is in accordance with the President of the Free Trade Agreement. Analysis was found as 19%.)
An insurance spokesperson said on Wednesday that the Trump administration's announcement suspended double-digit global tariffs for 90 days and did not change the company's forecasts. Treasury Secretary Scott Bescent responded to reporters' questions after the announcement that the suspension would not apply to certain tariffs, such as cars.
“What increases the cost of repairs will affect prices,” said Robert Passmore, a member of the American Property Casualty Insurance Association, a large insurance company. According to the association, approximately 60% of the parts used in car shop repairs are imported from Mexico, Canada and China.
Auto insurance prices have skyrocketed in recent years for a variety of reasons, including more claims due to driving habits that have deteriorated during the pandemic, the use of more expensive technology in cars, and damage caused by powerful storms and ail. According to the Bureau of Labor Statistics, the increase has been moderate recently, but car insurance costs rose 7.5% in March compared to the previous year.
When will the increase affect driver policy?
Insurify's data reporter Matt Brannon said consumers will not immediately affect rates. Rather, depending on when the policy is updated, perhaps higher premiums will arrive by the end of the year.
Michael Dellon, an associate in the Research and Advocacy of the Consumer Federation's Fair Auto Insurance Campaign, said auto insurance is regulated by the state and insurers must collect months of claim data to show higher rate requests rather than generally condemn customs duties. “They have to justify that,” Deron said.
Can it help to reduce the car premium?
According to Jon Linkov, assistant car editor at Consumer Reports, there is no magic solution to mitigate the impact of tariffs. However, the expected impact is months away, so now it's a good opportunity to check your policy and make sure you don't have coverage beyond what you need, or make other changes that will help you keep the rise from factors beyond tariffs.
“Usually, if you have a rubber stamp on a new premium, reach out to the insurance company,” Rinkoff said. Ask the changes that insurance companies recommend to save money.
If your car is old and of low value, you may be able to save money by dropping protection from options like a crash. This covers “comprehensive” coverage that covers damage to the car after an accident, or theft and damage such as falling wood, ailing, flooding, etc. The rule of thumb proposed by the industry group Insurance Information Institute is that if your car is worth less than 10 times the annual premium, you should consider removing optional coverage. (The coverage for liability for injury to another person or damage to property caused while driving is required in almost every state, although the minimum coverage varies.)
You can also consider increasing the deductible. This is the amount you will have to pay from your pocket when submitting a claim. If you have a $500 deduction, you can reduce the premium by up to 25% by increasing the deduction to $1,000, Linkov said. However, if you need to file a claim, make sure you can cover that amount.
“Do you have available cash?” he said. “Set your savings aside, and then try and get them if necessary.”
If you have younger adults in your policy, check if they are inexpensive to get their compensation. “It may be time to drive them away,” Rinkoff said.
Experts say you can pay for your shopping. You can use a variety of online marketplaces, but use backup emails to receive quotes to prevent insurers from being incurred. Passmore said that when you shop to make sure you get Apple to April quotes for the same coverage, keep your current auto policy right in front of you. (And read about my colleague's failed experiences of cheap price shopping before you get your hopes.)
Should I try a system that monitors driving?
Passmore said that saving money can be saved by allowing insurance companies to install devices in vehicles that monitor driving behavior and track driving on their mobile phones. A 10% discount is common just for signing up. The system usually collects information such as how it operates, how long it takes, braking and acceleration, and telephone usage.
Passmore said he used it himself and realized it made him a better driver.
However, both consumer reports and the Consumer Federation are concerned about such systems due to the lack of privacy protection. Rinkoff said there is still little regulation as to what exactly can be done with the data collected by insurers.
But if you're not driving — perhaps because you're traveling and shortening your commute or working from home — you'll always ask your insurance company to contact your new mileage total and reassess your policy, Linkov said. Low mileage means lower risk of accidents, which should translate to a lower rate.
Being a safer driver can also help you avoid accidents and speeding tickets. Therefore, taking the “defensive driving” course will save you money. “The history of a driver is the most important part of how your rates are set,” Brannon said.
Insurance companies may offer discounts for premiums obtained directly from your bank account or for student drivers who maintain good grades. So, ask about them too.
Can repairs save money?
If you are constantly receiving service from the dealer who bought your car, it may be worth checking out to see if an independent repair shop can save you money, Linkov said. Ask for reference and start with basic services such as oil changes and tyre rotation. If your shop doesn't turn everyday maintenance into tough selling for more expensive jobs, consider doing business there.
If you need to file an insurance claim, he said a knowledgeable mechanic can advise on issues such as whether it is acceptable to use cheap “aftermarket” parts for certain repairs, or whether it is necessary to encourage the insurer to cover parts from the original manufacturer.
