Car insurance premiums are already on the rise, and new tariffs on imported auto parts may cause rates to climb even higher.
The U.S. has imposed a 25% tariff on assembled vehicles and a 25% tariff on certain auto parts. According to analysts at Mitchell, these tariffs will increase the cost of vehicle repairs, particularly for electronics and Advanced Driver Assistance Systems (ADAS). As a result, insurance premiums could see a significant rise.
CheapInsurance has identified the states and drivers most likely to be affected, especially in regions like Florida and Louisiana, where auto imports are high. Lower-income households may also feel the strain.
Experts predict that, following the 25% tariff, which takes effect on May 3, 2025, vehicle repair costs will increase, and insurance companies will likely pass those costs on to consumers. Mitchell analysts expect that premium hikes could begin as early as the summer of 2025.
The process is straightforward: Higher costs for auto parts lead to more expensive repairs, larger insurance payouts, and, ultimately, higher premiums. Tariff-affected parts include engines, transmissions, electrical systems, and ADAS sensors—some of the most expensive components to replace.
Related topics:
- Moody’s Appoints Simon Harris to Lead Global Insurance Initiative
- Himalayan Life Insurance Launches New Book to Promote Insurance Awareness
- New Proposal Could Make Homeowners Insurance More Accessible in High-Risk Wildfire Zones
