After years of relentless increases, auto insurance policyholders have been enjoying a relative break in the recent cycle.
Average full-coverage premiums fell roughly 6% in 2025, according to Insurify analyses, marking the first meaningful decline after rates surged an average of 46% nationwide between 2022 and 2024.
But that calm may not last.
A growing body of industry analysis suggests that the impact of tariffs imposed on imported vehicles, auto parts, steel, and aluminum could begin filtering through the insurance system in the coming months. This could potentially push premiums higher than previously expected.
Insurify projects that the average annual cost of full-coverage car insurance will rise about 1% in 2026. But if tariffs significantly increase vehicle repair and replacement costs, Insurify estimates premiums could rise about 4%.
“While auto insurance rates have not yet fully reflected the impact of tariffs, the underlying cost pressures are already building throughout the automotive supply chain,” Saleh Taebi, founder and CEO at USAWheels, a leading e-commerce platform for wheels, tires, and automotive parts across North America, told Insurify. “Insurance claims are ultimately tied to repair costs. If replacement parts, wheels, tires, sensors, electronics, and other vehicle components become more expensive, the cost of repairing damaged vehicles rises as well.”
“Historically, insurers adjust premiums based on claims costs, so there is often a lag between cost increases in the supply chain and what consumers eventually see reflected in their insurance rates,” he said.
Timing is the enemy. While many tariffs took effect in April 2025, insurance pricing typically lags behind broader economic changes. Insurers often need 12 to 18 months to collect claims data, evaluate cost trends, and obtain regulatory approval for rate changes before those increases reach consumers.
When vehicles become more expensive to repair or replace, insurers pay more to settle claims. Those higher costs eventually flow through to policyholders as higher premiums.
Some industry analysts estimate that the 25% tariffs imposed on imported vehicles and many automotive components would increase insurance costs by roughly 8% on average beyond underlying inflation and other cost pressures. And that may be conservative.
“The tariff math worries me more than the 8% headline suggests,” Josh Katz, CPA and founder of Ohio-based Universal Tax Professionals, told Insurify. “That number assumes a clean pass-through. But parts inflation tends to compound. Repair costs go up, claims get more expensive, and insurers price that risk forward. So consumers can see the hit before the tariff even fully lands, which is part of why rates feel jumpy.”
Katz said several of his clients who own repair shops are already stockpiling parts ahead of the increases, which ties up cash that could be earmarked for other things.
“For consumers, especially retirees on fixed incomes, my advice is boring but it works,” he said. “Raise your deductible if you’ve got an emergency fund behind it, and actually shop your policy every renewal time instead of letting it go on autopilot.”
Many modern vehicles depend on globally sourced components, even when assembled in North America. Replacement parts ranging from bumpers and headlights to sensors and electronic modules frequently cross international supply chains before reaching repair shops.
Recent trade agreements with Japan, South Korea, and the European Union established 15% tariffs on imported vehicles and many auto parts. Together, those trading partners account for tens of billions of dollars in annual U.S. vehicle and automotive-parts imports.
As those higher costs move through supply chains, repair bills are expected to rise.
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
)
){kind=small}
)
)
)
)
)
)