Expect to pay more for car insurance this year. Federal data shows motor vehicle insurance premiums are already up by almost 12% over the last year. And a new study suggests prices could rise even more, especially if tariffs are in play.
Matt Brannon is a data journalist at Insurify, a website that allows consumers to compare insurance prices.
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"Auto insurance costs were already projected to rise this year, but with tariffs on Canada and Mexico, they would rise about 60% faster," said Brannon.
Data analysts at the company looked into how much President Donald Trump's proposed 25% tariff on imports from Canada and Mexico could impact full-coverage car insurance costs.
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"Before tariffs, we expected to see about a 5% increase in prices by the end of the year across the nation," explained Brannon. "Now, that estimate has been revised upward to 8% in the event of tariffs."
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The average full-coverage premium in 2024 was $2,313. If no tariffs are tacked on, Insurify expects that cost to rise $120 by the end of 2025.
But if and when the new tariffs are in place, Insurify expects that cost to rise to just over $2,500 by the end of 2025.
"When you have tariffs, it costs more for auto parts," Brannon said. "When you damage your car, get into an accident, and then insurance has to pay to cover that."
According to the American Property Casualty Insurance Association, roughly 6 out of every 10 parts used by U.S. auto repair shops come from Mexico, Canada and China.
"One fifth of cars and trucks sold in the U.S. come from Canada and Mexico," said Brannon. "About $78 billion in parts came from Mexico in 2023, and $20 billion from Canada."
"It's important to note that there are certain parts of a car that are not made in the U.S., so it can be difficult to try to set up production, and that can take a lot of time," added Brannon.
Tariffs aside, car insurance prices are increasing anyway. Bad driving post-pandemic is part of the problem. The price and sophistication of vehicles today, and the growing pool of crash victims litigating claims, are also to blame.
"In a nutshell, insurers were paying out more money for these accidents, for these repairs and replacements, and that's why auto insurance costs have been rising," said Brannon. "These insurers are now paying much larger sums in losses than they had been before."
To save money on car insurance, it's important to compare prices between insurers. You can also check to see if your insurance company has some kind of safe driving incentive program that would make you eligible for a discount.
