Car insurance premiums in the United States are projected to rise through the end of 2025, with new tariffs on imported auto parts potentially adding further pressure on insurers and policyholders.
According to an analysis from Insurify, full-coverage car insurance could increase by 7% to an average of $2,472 per year by December 2025 if recently imposed tariffs lead to significant underwriting losses.
Even without tariff-driven effects, Insurify projects a 4% rate increase in the second half of the year.
The expected rise follows a relatively stable first half of 2025, during which rates remained flat across the country and declined in 27 states. That trend has since reversed amid inflation and growing uncertainty around trade policy.
Insurify attributes the upward pressure on premiums in part to new tariffs on automotive imports.
“The US has imposed several rounds of tariffs that raise the cost of auto parts, thus increasing the cost of repair claims for insurers,” the report said. The firm noted that insurers may raise premiums to reflect the added financial exposure, though not all insurers will respond in the same way, and regulatory review could delay or modify proposed increases.
Industry-wide, the projected cost burden from tariffs is substantial. One estimate projects that personal auto claims costs could rise by as much as $60 billion over the next year, driven by increased prices for imported parts and materials.
Insurers in the US and Canada are reportedly reassessing their exposure to supply chain-related cost increases. The Insurance Bureau of Canada recently warned that tariffs affecting cross-border auto part flows could create upward pricing pressure on auto insurance, particularly given the high level of integration in North American vehicle manufacturing and repair supply chains.
Meanwhile, Progressive CEO Tricia Griffith previously said the company intends to incorporate the effect of new tariffs on imports from Canada, Mexico, and China into future rate filings. Griffith said adjustments would depend on how tariffs influence claims data and whether pricing trends remain elevated.
Tariffs are also likely to impact claims management. Increased costs for lumber, steel, electronic components, and other materials essential to vehicle repairs may slow the claims process, while simultaneously inflating repair costs.
From June 2022 to June 2024, average annual car insurance premiums increased by over 40%, or about $700. Insurify cited a combination of rising labor costs, more expensive replacement parts, and increasingly complex vehicles as key factors behind the increase, along with a rise in extreme weather events that contribute to claim volume and severity.
Data from the Insurance Information Institute (Triple-I) shows that auto claim severity has climbed significantly in recent years. In 2023, the average liability claim for property damage reached $6,551, up from $4,689 in 2020. Collision claim severity grew at a comparable rate during that same period.
While tariffs could further accelerate premium growth, Insurify noted that recent trade agreements may partially offset the impact. In recent months, former President Donald Trump announced agreements with Japan, South Korea, and the European Union that reduce auto tariffs from 25% to 15%. The durability and enforcement of these deals remain uncertain.
According to AAA’s 2024 estimates, the average cost to own and operate a new vehicle in the U.S. has climbed to $12,297 per year, or roughly $1,024 per month.
Insurify’s forecast shows that average premiums may rise in 46 states by the end of 2025. Maryland recently surpassed New York as the most expensive state for car insurance, with average annual premiums reaching $4,093 as of June – up 20% year over year.
New York follows at $3,724, with Delaware ($3,366) and Rhode Island ($3,331) rounding out the top four. Washington, D.C., which was excluded from the state rankings, posted a higher average of $3,780.
Florida, while often among the highest-cost markets for insurers due to storm-related losses, ranks ninth for drivers in terms of premiums. Average annual premiums in Florida fell to $2,912 in June, down from a peak of $3,250 in August 2024.
On the opposite end of the scale, New Hampshire remains the least expensive state for auto insurance, with an average annual premium of $993. Other states with relatively low rates include Wyoming ($1,172), North Dakota ($1,237), and North Carolina ($1,250).
As of June 2025, the national average for full-coverage car insurance stood at $2,310 annually.
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