Car insurance rates could rise with tariffs
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Car insurance rates could rise more by the end of the year with tariffs than without them, including by nearly 7% in Arizona, a new projection finds.
Why it matters: The analysis shows one more way that Americans pay for higher tariffs.
Driving the news: The nationwide average annual cost of full-coverage car insurance could rise by 7% between June and December if tariffs stay in effect, compared to 4% otherwise, per a new report from Insurify.
By the numbers: In raw terms, the average cost could hit $2,472 with tariffs, compared to $2,402 without them.
- The projected 6.99% increase in Arizona could increase insurance costs from $1,995 to $2,052.
- That's based on the tariff picture as of Aug. 1, reflecting the Trump administration's recently lowered rates on cars and auto parts from Japan, South Korea and Europe.
Between the lines: Tariffs affect insurance rates by increasing the costs of imported parts needed for repairs.
- Inflation, accident frequency and claims due to extreme weather also impact rates, among other factors.
What they're saying: "Initially, car insurance companies looked at 2025 as a year to keep insurance rates stable, or even cut them," per Insurify's report.
- "Tariffs and inflation could derail that trend."
Caveat: Premiums may fluctuate as the fast-changing tariff landscape continues shifting, or if tariffs prove "less burdensome than expected," Insurify notes.
- Claims volume could also fall, and insurance regulators could fight price hikes.
How it works: Insurify's projections are based on over 97 million rates from the insurance companies it works with, and reflect median costs for drivers age 20-70 with clean records and at least average credit.