The ongoing tariff war could cause already elevated car insurance rates to soar even higher
The 25% tariffs on cars and auto parts from Canada and Mexico will increase premiums by an average of 8% by the end of 2025, according to a study from insurance comparison platform Insurify, going from $2,313 a year up to $2,502.
That's because the U.S. relies heavily on cars and auto parts made by its neighbors and pricier parts translate into higher premiums to cover repairing or replacing them.
Global car and truck tariffs took effect on April 3, 2025, and duties on imported auto parts are slated to start on May 3.
Tariffs on steel and aluminum will likely further increase insurance costs, as about 50% of aluminum imports come from Mexico and Canada. About 35% of U.S. steel imports come from Canada.
The trade war comes at a time when car insurance costs are already soaring: Without the tariffs, Insurify projected, car insurance would still increase by 5%.
Consumers won't feel the pinch immediately, however, since insurance companies can only raise prices when it's time to renew. In addition, insurers would still have to get approval for rate increases from individual states.
The impact could be felt by the end of the year, however, according to Insurify's report.
1. Shop around and compare quotes
Insurance companies view drivers' risk factors differently, so get quotes from several companies to see which will offer the same deal. Make sure you request the same coverage levels and deductibles to get an accurate comparison. Experts recommend price shopping whenever your policy is up for renewal.
2. Increase your deductible
Your deductible is the amount you pay for repairs before your insurance kicks in. Typically, the higher your deductible, the lower your premium. According to the Insurance Information Institute, raising your deductible from $200 to $500 can reduce the cost of full-coverage insurance by up to 30%.
However, you need to make sure you can afford the additional out-of-pocket costs.
3. Pay your annual premium up front
Many insurers charge a fee for dividing your premium into monthly payments. Auto-Owners is among those that offer a discount if you pay in full at renewal time. The Lansing, Michigan-based company's low rates, superior customer service and numerous add-ons made us crown it one of our top auto insurance companies
Auto-Owners Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Auto-Owners offers affordable premiums with high customer satisfaction ratings. There are 12 different types of discounts available, as well as various other types of insurance besides auto.
Terms apply.
4. Improve your credit score
Except in a handful of states, insurers are allowed to consider a driver's credit score when determining their premiums. The better your credit score, the lower your rates. To improve your credit score, pay your bills on time and check your credit report for any errors.
Using less of your available credit can boost your score, as well, so try asking your credit card company for an increase. Just be sure not to spend it.
5. Bundle car and home insurance
Insurers reward customers who buy more than one line of insurance: If you get your car insurance and homeowners insurance from the same company, you could get a discount of as much as 25%, depending on the insurer and state.
Farmers and State Farm are two of our picks for the best companies for bundling insurance.
Farmers Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Farmers Insurance offers 23 discounts for auto insurance and issues policies in every state except Alaska, Delaware, Hawaii, Maine, New Hampshire, Rhode Island, Vermont, West Virginia and Washington, D.C.
Terms apply.
Read our review of Farmers car insurance
State Farm Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
State Farm is one of the largest auto insurers in the U.S. based on market share. It has an excellent reputation for customer satisfaction and offers discounts for safe driving and young drivers.
Terms apply.
Read our State Farm Auto Insurance review
Car insurance FAQs
Why will tariffs make car insurance more expensive?
The U.S. imports much of its auto parts from Mexico and Canada. A 25% tariff on autos and car parts will eventually trickle down into higher costs for repairs and replacements
Why is car insurance so expensive right now?
Even before President Donald Trump's tariffs were announced, insurance premiums were at an all-time high, thanks to an increase in severe accidents, rising costs for parts and labor and more complex technology in automobiles.
How much will tariffs increase car insurance?
According to Insurify, the tariffs will raise auto insurance by an average of 8% by the close of 2025, from $2,313 a year to $2,502.
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