While the price of car insurance has risen in recent years, President Donald Trump’s tariff polices look set to raise it further.
An analysis by Insurify found that the cost of full-coverage car insurance could rise as much as seven percent to an average of $2,472 annually by the end of this year if tariffs lead to major losses for insurers.
Without the effect of tariffs, drivers are still set to see a rate increase of four percent in the second half of 2025, according to the insurance comparison site.
In a number of states, such as Rhode Island, Michigan, Maine, and Delaware, costs could rise more than 12 percent by the end of the year.
Insurify noted that in the first half of this year, car insurance rates held steady across the country and decreased in as many as 27 states, a trend now set to end because of inflation and tariffs.
“The U.S. has imposed several rounds of tariffs that raise the cost of auto parts, thus increasing the cost of repair claims for insurers,” Insurify said.
The company added that insurers “could raise premiums to align their rates with this additional financial risk.”
The firm also found that between June 2022 and June 2024, annual insurance costs rose by more than 40 percent, or $700. Rising labor costs, more expensive parts, vehicles with advanced technology, and extreme weather conditions have all contributed to the rise in prices.
According to the industry trade group Insurance Information Institute, the average cost of a claim has also risen. In 2023, the average claim for property damage was $6,551, compared with $4,689 in 2020. Over the same period, collision claims rose by a similar amount, roughly 40 percent.
However, it’s not certain that tariffs will push up the cost of car insurance, as regulators may deter increases, and some insurers have already included the impact of tariffs in their rates.
The uncertainty partly comes from the unpredictability of the tariffs. Trump recently revealed deals with South Korea, Japan, and the European Union to cut auto tariffs from 25 to 15 percent.
In its 2024 study, AAA found that it now costs roughly $12,297 each year to operate a new car.
According to Insurify, inflation and insurer losses could mean rising rates in all but four states by the end of the year.
Maryland has overtaken New York as the most expensive state in which to get car insurance. The state is now seeing average rates of $4,093, a rise of 20 percent compared to last summer. In New York, the average annual cost is $3,724, Delaware comes in third at $3,366, and Rhode Island is in fourth place with an average cost of $3,331.
Washington, D.C., which is not a state, has an average annual cost of $3,780.
While Florida is the priciest state for auto insurers, it’s the ninth most expensive for drivers. In June, the average annual premium in the state was $3,250.
New Hampshire is the cheapest state when it comes to car insurance, with premiums averaging $993. Wyoming, North Dakota, and North Carolina also ranked among the more affordable states.
In June, the average cost of full-coverage car insurance in the country as a whole was $2,310 annually.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.