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Cars and tariffs. There’s more at stake than the price on the lot. New tariffs on imports of autos, parts and related materials will drive up not just the cost of a vehicle, but the cost of repairs and, in turn, the price of auto insurance, analysts say. By the end of this year, the average annual premium on an auto policy is expected to reach $2,759 — an increase of $446, or 19%, from the end of 2024, according to Insurify, an online insurance agency. And there's a big variation by state. “The consensus is that recent tariffs will raise the price of auto parts and cause insurers to spend more money on repair claims,” Mallory Mooney, director of sales and service at Insurify, said in a statement earlier this month. “Faced with this cost increase, we expect insurers will have no other option than to pass these losses on to drivers in the form of higher premiums.” Car repair costs have already been increasing, and in fact, the average insurance premium rose even more (by 24%) in 2023 because of soaring inflation and claims related to severe weather, according to Insurify. But before the tariffs were imposed, Insurify expected this year’s increase to be significantly smaller — 5.3%, or $122. Of course, drivers aren’t likely to see these increases until they renew their policies or switch insurers. And a lot could change before the end of the year, given how quickly international trade policy is evolving. So what? All drivers must have insurance. And auto premiums will almost certainly increase in 2025 — it's just a matter of how much. Here are a few ways to help offset any added costs:• Shop around. Rates can vary widely between insurers, so explore your options. (SoFi’s partner, Experian Insurance Services, can even input your current insurance details to make it easier to compare quotes.)
• Bundle policies. Own a home, boat, or motorcycle? Combining your coverage can unlock discounts.
• Drive safely (and prove it). Many insurers offer discounts for enrolling in safe-driving programs that track your habits.
• Raise your deductible. A policy with a higher deductible may cost less. Just make sure you could cover the additional cost with savings if you wound up filing a claim.
Related Reading
• Auto Groups: US Tariff Policies ‘Will Scramble the Global Automotive Supply Chain’ (Automotive Dive)
• Consumer Spending Is Up Big in Early April as People Buy in Anticipation of Tariffs (CNBC)
• 31 Ways to Save Money on Car Maintenance (SoFi)
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