How Tariffs Could Impact Your Car Insurance

Rates are already high

Even before the addition of tariffs, insurance rates have already been rising substantially. By analyzing rates across 34,500 U.S. ZIP codes, The Zebra found that the average American driver is currently paying $2,189 on average for car insurance annually. That’s a nearly 19% increase over the previous year and a staggering 78% over the past decade. 

As tariffs weren’t at play at the time this data was collected, the historic increase in insurance rates could be attributed to already rising repair costs due to inflation, changes in government regulations, and weather and disasters that cause widespread property damage and billions in claims all at once. The tariffs will only compound these issues of rising rates. 

David Seider, Chief Commercial Officer at The Zebra, explains, "For consumers, the consistently high inflation rates we’re seeing, along with potential tariffs, means we can likely expect rate increases – an unwelcome sight after years of steep rate increases. But just as insurers are better prepared, I think the consumers are better prepared as well, with more tools at their disposal now than they had even a couple of years ago. Consumers today have more access to ways to compare rates online and find the best rates available to them."

Tariffs could push car insurance rates even higher

Automakers are already warning of price hikes — some vehicle models could see increases of up to 25%, with immediate consequences for both price tags and vehicle availability.^[1] When the cost of new and used cars rises, along with the cost of parts, that increase doesn't just stop at the dealership — it trickles into the world of auto insurance as well.

Insurance companies calculate premiums based on how much it would cost to repair or replace a vehicle. The price increase for consumers comes from the insurers' need to afford to make a consumer "whole" after an accident. That means that when the cost to repair or replace a vehicle goes up, so too do auto insurance premiums. Tariffs on the materials used to make auto parts or on the actual finished auto parts directly impact consumers. Some car dealerships have also already started "front-running" tariffs and preemptively raised prices. If the price of new and used vehicles continues to rise, then so will the price of auto insurance.

Many drivers are unaware of the connection between tariffs and insurance

Interestingly, many Americans may not realize how closely tied these new tariffs are to their car insurance rates. A consumer survey by The Zebra found:

• Nearly 40% believe tariffs will increase insurance rates
• 27% were unaware that tariffs could impact rates
• 26% didn’t believe there would be any impact at all
• Nearly 8% even thought tariffs might cause rates to drop

These results highlight a common misunderstanding: many consumers don’t see the connection between global trade policy and their monthly insurance bill — but the link is very real.

Temporary tariff relief for automakers — But what about consumers?

President Trump has granted a one-month exemption on the new tariffs for vehicles imported from Mexico and Canada — but only for U.S. automakers like Ford, General Motors and Stellantis. The goal is to give the “Big Three” time to adapt without being financially harmed.^[2]

This move allows U.S. manufacturers to shift production back to American soil. However, international automakers — particularly those from South Korea, Japan and Europe — could benefit significantly, bringing in up to 2 million vehicles tariff-free. While this might increase short-term availability, it’s unlikely to reverse the upward pressure on insurance rates for U.S. drivers.

How to save on your auto insurance

While you can’t control tariffs or inflation, there are smart ways to keep your insurance costs in check:

• Shop around – Compare rates at least once a year — or even every six months — to make sure you’re getting the best deal.
• Take advantage of discounts – Many insurers offer savings for safe driving, good grades, dashcam use and more.
• Timing matters – Consider shopping when your credit score improves, your driving record changes or someone on your policy hits a milestone age.
• Use comparison tools – Platforms like The Zebra can help streamline the process, helping you find competitive quotes in just minutes.