17-05-2025
How tariffs could drive up your auto insurance costs
WICHITA, Kan. (KSNW) — The bill for your insurance premium could be affected in the coming months if more tariffs are implemented. KSN spoke with some insurance experts to understand how your premiums could see a spike.
Tariffs and trade wars have the auto insurance industry in a wait-and-see position, bracing for the other shoe to fall.
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'It's just a cyclical; it kind of rolls downhill and affects everything eventually,' said Paul McGuire, Account Executive at Conrade Insurance Group.
That eventually could be your personal or business auto insurance, especially if you have an imported car or need repairs with car parts that are imported from various countries.
McGuire said, 'If the price of importing a car goes up 25 percent, that means the value of that car is now 25 percent higher. So, you have to insure the car at a higher limit. So, if you have a total loss on that vehicle, insurance is paying out 25 percent more.'
McGuire says that in this scenario, the only way for the insurance company to equal that cost rise is by raising the premiums, as they won't be able to pay out more claims without charging more. He also says inflation has already affected this industry in the last five years.
'That puts higher price on cars, higher price on parts and then higher price on service. And the labor, which is all tied into the claims,' said McGuire.
Bob Passmore, the Department Vice President, Personal Lines at APCIA, said, 'Currently, we're thinking that all insurance claims costs could rise anywhere between $23 billion and $45 billion over a 12-month period.'
This means billions of dollars are paid by auto insurers for vehicle repairs or claims.
Passmore added, 'The number one driver of what we pay for auto insurance is the cost of those claims. And when the cost of those claims starts going up, then companies are going to have to be able to keep up.'
He also gave some advice on how to keep your costs low with auto insurance. He said every few years, you should shop for the best deal.
He also said, 'You can get quotes online, you can make a couple of phone calls, and you can sometimes save yourself quite a bit of money. You can also take a look at your coverages to make sure that you have the coverage that you need should you get into a crash.'
The experts also told KSN that six out of ten auto parts that are used in repairs come from Mexico, Canada, and China — all countries the Trump administration is negotiating with.
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