The Impact of Tariffs on Auto Insurance Rates
The current slate of tariffs and proposed additional tariffs on car parts are driving up the cost of car ownership, affecting both potential buyers and current vehicle owners. Even those not planning to purchase a new vehicle will feel the impact as maintenance and repair costs rise due to more expensive parts.
Rising Costs Across the Automotive Industry
A 25% tariff on imported new cars is currently in effect, with plans to impose a similar tariff on some imported car parts, although details are still pending. Additional tariffs on steel, aluminum, and goods from specific countries further complicate the landscape. These tariffs are pushing up prices for various car parts such as brake pads from Mexico, brake rotors from China, and suspension parts from Turkey and Thailand.
Laurent Spence, working at a NAPA auto parts shop in Desert Hot Springs, California, notes that he now updates prices daily due to the rising costs. Many shop owners and consumers are stockpiling parts in anticipation of further price increases.
The Ripple Effect on Auto Insurance
As repair and maintenance costs escalate due to more expensive parts, auto insurers face higher costs. According to Shannon Martin, an insurance expert at Bankrate, even those with basic liability coverage will see premium increases due to the higher cost of repairing or replacing vehicles.
“If you’re someone with an older car and liability-only coverage, you might think, ‘Well, my rate’s going to stay the same.’ But it won’t,” Martin explains. This is because property damage coverage, which pays for repairs to others’ vehicles, will become more expensive.
Navigating Uncertainty
Insurance rates won’t spike overnight as companies need time to assess costs and negotiate with state regulators. However, the unpredictability surrounding tariffs makes it challenging to forecast future insurance rate hikes. Experts recommend maintaining a good driving record, shopping around for insurance rates, and having a trusted mechanic to help mitigate these rising costs.
As Jessica Caldwell of Edmunds notes, “These tariffs are going to affect everybody who owns and operates a car.” The advice remains to drive cautiously, as that’s one factor within personal control amidst the uncertainty caused by changing tariff policies.
