By Molly Burke, SAN FRANCISCO
Americans could see another tariff-caused rise in costs — to their auto insurance policies — as the insurance industry braces for higher prices on car parts and materials needed to fix damaged vehicles.
Car insurance premiums could increase within 12 to 18 months as companies deal with higher costs of repairs, Eileen Gilligan, a spokesperson for the American Property Casualty Insurance Association, a trade association for insurers, said Friday.
David Snyder, vice president of the association, estimated that costs of auto repairs and replacements could be between $30 and $60 billion more per year due to new tariffs enacted by President Donald Trump Thursday.
“Insurers repair and replace millions of automobiles every year,” Snyder said. “It’s unrealistic to assume that they’re going to be able to absorb the kind of huge cost increases to settle claims as a result of tariffs that we’re talking about. This is not a minor additional cost. It’s significant.”
Snyder said that numerous tariffs will contribute to rising costs of repairing or replacing cars, including a 25% tariff on all new cars assembled outside the United States that took effect Thursday. In early May, the 25% tariff will also apply to auto parts imported from outside the country.
The tariffs, which Trump said are “reciprocal,” have faced backlash over the expected increased costs of consumer goods and the resulting trade wars that have led to stock market downturns and uncertainty.
The increase in costs for car insurance joins a long list of items, including groceries and everyday essentials, that economists estimate could see a jump in prices. With many materials used in car repair coming from various countries, the full impact of tariffs on the costs could be complex, industry experts said.
The tariffs on countries that export steel, aluminum and other materials used in car assembly and repair to the United States are also contributing to the expected significant increase in cost, Snyder said.
Janet Ruiz, a spokesperson for the Insurance Information Institute, said consumers won’t likely see increases to their policies until they’re up for renewal. Ruiz emphasized that tariffs could “lead to broader macroeconomic and geopolitical disruptions,” potentially further impacting the insurance industry.
Carmen Balber, executive director of Consumer Watchdog, a consumer advocacy group, said that she expects the new tariffs to raise the price of car parts and new cars right away.
“Increasing the cost of a car is likely to jack up insurance rates quickly as repair costs rise,” Balber said in a statement. “That’s going to hit consumers hard who are already hurting from high car insurance costs.”
For car insurance policyholders hoping to save money as premiums increase, Snyder advised consumers to shop around to different companies, as they are likely to pass tariff-related costs onto customers in different ways as they try to keep their rates competitive.
Snyder also said consumers should check in regularly with their auto insurer to keep track of potential deductibles that could lower costs.
Outside of consumer tips, Snyder advised drivers to remember that they can speak out against tariffs and “make their voices heard in the political system.”
“This is a situation we don’t want to be in, and we know our customers don’t want to be in either,” Snyder said.
