- Car insurance premiums may rise unexpectedly under President Trump.
- Import tariffs could make parts, and therefore repairs, more expensive.
- Premiums might jump 3 percent by the end of 2025, Insurify says.
If you thought car insurance was already putting a dent in your wallet, 2025 might bring some extra pain at renewal time. Insurance premiums could spike if President Donald Trump follows through on his proposed tariffs on goods coming from Canada and Mexico, which could come into force in just a few weeks time.
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What do taxes on imports have to do with your insurance bill? Turns out, quite a lot. These tariffs could drive up the cost of car parts, which would make vehicle repairs more expensive, according to price comparison website Insurify. And when repairs get pricier, insurance companies don’t just eat the cost. They pass it along to drivers like you and me.
How Tariffs Affect Car Repairs
Many of the parts used in vehicle repairs – think bumpers, fenders, transmissions, and even those little bits of trim you never even see but which have to be replaced when you wreck a car – come from Canada and Mexico.
Around six out of 10 auto parts used in US repairs are imported from Mexico, Canada and China, according to data from the American Property Casualty Insurance Association quoted by CNBC, with some components crossing the border multiple times before they’re installed in a car. If tariffs go into effect, those parts will cost more to import.
And guess who else has to pay more? Repair shops. When they charge insurers more to fix a wrecked car, those costs trickle down to customers in the form of higher premiums. So a fender bender that might’ve been a minor inconvenience in 2024 could become a bigger financial headache in 2025.
How Much More Will You Pay?
The good news is that although premiums could rise, we’re not talking about them doubling. Insurify says premiums could jump by 8 percent to an average of $2,502 by the end of 2025 with the tariffs in place, versus a 5 percent increase to $2,435 without the tariffs.
Exactly what tariffs Trump has planned, when they’ll come into force and what items they’ll affect remains unclear. He’s previously threatened a 25 percent duty on goods from Canada and Mexico, claiming it would kick in on February 1, but then pushed that back to March 4. Now, tariffs are scheduled for April 2.
So, while it’s not time to panic, it might be smart to brace yourself for a slightly higher insurance bill. If the tariffs do go through, that little ding in your bumper could come with a bigger price tag than you expect.