When most people think about why their auto insurance rates go up, they usually blame accidents, tickets, or their credit score. But there’s another, often overlooked factor that can quietly raise your premium: tariffs. In this blog, we’ll break down what tariffs are, how they impact car repair costs, and why that trickles down into higher auto insurance premiums for everyone.
What are Tariffs?
Tariffs are taxes imposed by a government on imported goods. In the automotive world, that includes everything from steel and aluminum to finished parts like bumpers, sensors, and electronics. When the cost of these parts increases due to tariffs, it directly impacts the cost of repairing vehicles
Why Insurance Companies Care About Tariffs Insurance companies base premiums on risk — and cost. When the cost of repairing a damaged vehicle goes up, so does the cost of settling a claim. For example, according to the American Property Casualty Insurance Association (APCIA), tariffs on imported auto parts can increase repair costs by as much as 2.7% overall. That might not sound like much, but when applied across millions of vehicles and claims, it becomes a major expense for insurers.
As a result, insurance companies adjust their pricing to maintain profitability. That means even if you haven’t had an accident or filed a claim, your rates could still rise due to increased costs on their end.
Where Do Auto Parts Come From? According to the U.S. International Trade Commission:
- Over 70% of auto parts used in the U.S. are imported.
- The top sources include Mexico, China, Japan, Germany, and Canada.
- Tariffs on countries like China and Mexico have had a significant effect on part costs in recent years.
Real-World Example: Let’s say a bumper used to cost $500 pre-tariff. If tariffs drive that price up to $600, and the vehicle also requires a sensor (now $300 instead of $250), the total claim jumps significantly. Multiply this across thousands of claims per month, and insurers are forced to absorb or offset those costs — often by raising premiums.
How This Affects You Even if you’re a safe driver with no claims, you’re part of a broader risk pool. As repair costs increase, insurers adjust pricing across the board to stay profitable. This means your auto insurance renewal might come with a surprise rate hike, and tariffs may be part of the reason why.
What You Can Do:
- Review your coverage regularly. Make sure you’re not overpaying for outdated limits.
- Compare quotes. Work with an independent agent who can shop around with multiple carriers.
- Bundle policies. Combining home and auto often leads to discounts.
Final Thoughts Tariffs may seem like a distant economic policy, but their impact can hit much closer to home — right in your insurance bill. By staying informed and working with a trusted insurance advisor, you can better navigate rising costs and protect your budget.
Need help reviewing your auto policy? Contact us today for a personalized quote and policy review. We’re here to help you stay covered and save.
