Add this to worries about the likely impact of tariffs: costlier car insurance.
The new tariffs on imported cars, metals and parts announced by the Trump administration are expected to raise vehicle prices by thousands of dollars if they remain in place. And because parts used in auto repairs will also become more expensive, the average cost of automobile insurance is expected to increase.
The average annual premium for a full-coverage auto policy was just over $2,300 at the end of last year, according to an analysis by Insurify, an insurance comparison shopping website. The site initially estimated that premiums would increase just 5 percent this year, based on factors like inflation and insurer losses.
How much of an impact could tariffs have on car insurance costs?
With the addition of the tariffs, Insurify now projects premiums to rise at least 16 percent, or $378, to almost $2,700 on average nationally — about $256 more than without tariffs. The analysis includes the tariffs on steel and aluminum, those on imported cars and those on imported auto parts scheduled to take effect May 3. (Tariffs announced in February on products from Mexico and Canada were adjusted to exempt some goods, including cars and auto parts, that comply with the free trade agreement President Trump negotiated in his first term, according to Insurify. If that exemption is lifted, the increase in automobile premiums could be as high as 19 percent, the analysis found.)
An Insurify spokeswoman said the Trump administration’s announcement on Wednesday, pausing double-digit global tariffs for 90 days, didn’t change the company’s projections. Treasury Secretary Scott Bessent, in response to a reporter’s question after the announcement, indicated that the pause didn’t apply to certain tariffs like those on automobiles.
“Things that increase the cost of repairs impact prices,” said Robert Passmore, vice president of personal lines with the American Property Casualty Insurance Association, whose members are big insurance companies. About 60 percent of parts used in auto shop repairs are imported from Mexico, Canada and China, the association has said.
The price of car insurance has soared in recent years for a variety of reasons, including more claims resulting from driving habits that deteriorated during the pandemic, the use of more expensive technology in cars, and damage from strong storms and hail. While increases had recently begun to moderate, the cost of motor vehicle insurance still rose 7.5 percent in March compared with a year earlier, according to the Bureau of Labor Statistics.
When will the increases affect driver policies?
Consumers won’t see the impact in their rates immediately, Matt Brannon, a data reporter at Insurify, said. Rather, higher premiums will probably arrive by the end of the year, depending on when your policy renews.
Michael DeLong, the research and advocacy associate for Consumer Federation of America’s campaign for fair auto insurance, said that car insurance is regulated by the states and that insurers must gather several months of claims data, rather than blaming tariffs generally, to show their requests for higher rates are warranted. “They have to justify it,” Mr. DeLong said.
Can I do anything to help keep my auto premium down?
There’s no magic solution to ease the impact of tariffs, said Jon Linkov, deputy autos editor at Consumer Reports. But since the anticipated impact is months away, now is a good time to review your policy to make sure you don’t have coverage beyond what you need or to make other changes that will help tamp down increases from factors beyond tariffs.
“If you usually just rubber-stamp your new premium,” Mr. Linkov said, “reach out to your insurer.” Ask what changes the insurer recommends to save money.
If your car is old and of low value, you may be able to save by dropping optional protections like collision, which covers damage to your car after an accident, or “comprehensive” coverage, which covers theft and damage from things like falling trees, hail or flood. A rule of thumb suggested by the Insurance Information Institute, an industry group, is that you should consider dropping optional coverage if the car is worth less than 10 times the annual insurance premium. (Liability coverage, which pays for injuries to others or damage to property you cause when driving, is required in nearly all states, although minimum coverage amounts vary.)
You could also consider raising your deductible, an amount you must pay out of pocket when filing a claim. If you have a $500 deductible, you could lower your premium by as much as 25 percent by raising the deductible to $1,000, Mr. Linkov said. But make sure you can cover that amount, if you do need to file a claim.
“Do you have the cash available?” he said. “Make sure you put the savings aside, so you’ll have it if you need it.”
If you have young adults on your policy, check to see if it would be less expensive to have them get their own coverage. “It may be time to kick them off,” Mr. Linkov said.
It can pay to shop around, experts said. You can use various online marketplaces, but use a backup email for receiving quotes to avoid being inundated with inquiries from insurers. Have your current auto policy in front of you when you shop to be sure you are getting apples-to-apples quotes for the same coverage, Mr. Passmore said. (And before getting your hopes up, read about my colleagues’ failed experience in shopping for cheaper rates.)
Should I try a system that monitors my driving?
You can save money by allowing an insurer to install a device in your car that monitors your driving behavior or tracks your driving on your phone, Mr. Passmore said. Discounts of 10 percent are common just for signing up. The systems typically gather information such as how far you drive, what time of day you drive, braking and acceleration, and phone use.
Mr. Passmore said he used one himself and found that it had made him a better driver: “I was surprised how much hard braking I was doing.”
But both Consumer Reports and the Consumer Federation have concerns about such systems because they lack privacy protections. There’s little regulation, as of yet, about what exactly insurers can do with the data they collect, Mr. Linkov said.
If, however, you are driving less — perhaps because you have moved and have a shorter commute or are working at home — by all means contact your insurer with the new mileage total and ask for your policy to be re-rated, Mr. Linkov said. Fewer miles driven means a lower risk of accidents, which should translate to lower rates.
Becoming a safer driver can also help you avoid accidents and speeding tickets. So taking a “defensive driving” course may save you money. “Driver history is still the most important part of how your rate is set,” Mr. Brannon said.
Insurers may offer discounts for having premiums taken directly from your bank account or for student drivers who maintain good grades. So ask about those, too.
Can I save money in repairs?
If you always get service from the dealership where you bought your car, it may be worth checking around to see if an independent repair shop could save you money, Mr. Linkov said. Ask around for references and start out with a basic service like an oil change or tire rotation. If the shop doesn’t turn routine maintenance into a hard sell for more expensive work, consider taking your business there.
Should you ever have to file an insurance claim, he said, a knowledgeable mechanic can advise you on issues like whether it’s acceptable to use cheaper “aftermarket” parts for certain repairs or if you should push your insurer to cover parts from the original manufacturer, which is often preferable.
