US automotive insurance coverage premiums are increased than these in different international locations, GlobalData surveying has discovered. With the current 25% tariffs imposed on all foreign-made cars, together with broader import duties launched by President Donald Trump on 2 April 2025, the price of car possession is predicted to rise considerably. These modifications are more likely to place extra strain on insurers to extend coverage costs.
GlobalData’s 2024 Rising Developments Insurance coverage Shopper Survey reveals that 53.5% of US shoppers pay over $1,000 yearly for automotive insurance coverage. In distinction, solely 21.0% of UK shoppers report paying greater than £750 ($987) whereas simply 16.9% of Chinese language shoppers state their premiums exceed 7,000 yuan ($963). Amongst all 11 international locations included within the survey, none have a better proportion of shoppers paying $1,000 or extra for automotive insurance coverage than the US.
In the meantime, on April 2, 2025, President Trump introduced a complete tariff plan, marking a big shift in US commerce coverage. The plan features a common 10% tariff on most imports—with exemptions for Canada and Mexico—and better, country-specific tariffs: 34% on Chinese language items and 20% on these from the European Union. Most notably, it launched a 25% tariff on all foreign-made cars.
The 25% tariff on imported autos is predicted to considerably improve automotive costs within the US.
Anderson Financial Group (AEG) means that even the lowest-cost American autos may see value will increase of between $2,500 and $5,000, whereas imported fashions could expertise hikes of as much as $20,000. This escalation in car costs is anticipated to have a knock-on impact on associated sectors—significantly the motor insurance coverage trade. Furthermore, AEG cites that Trump’s 25% tariff on auto components could price American shoppers greater than $30bn in increased car costs and diminished automotive gross sales within the first 12 months.
As the price of each buying and changing autos rises, insurers are more likely to alter their pricing fashions to replicate the elevated worth in danger. Moreover, tariffs on imported auto components are anticipated to drive up restore prices, additional rising the price of claims. Insurify additionally forecasts that these mixed pressures may push common annual motor insurance coverage premiums from roughly $2,300 to over $2,750. In abstract, the brand new tariffs launched by the Trump administration—significantly these affecting imported autos—are anticipated to boost automotive costs, improve restore prices, and in the end drive up insurance coverage premiums. In response, insurers might want to revisit their underwriting methods, refine pricing fashions to account for increased claims prices, and spend money on applied sciences (corresponding to telematics) to extra precisely assess and handle threat.
