As President Trump’s global tariffs begin to take effect, there is plenty of news coverage on how tariffs will affect the U.S. and global economy. While much of the discussion focuses on manufacturing, agriculture, and consumer goods, it’s also important to consider how tariffs impact insurance—particularly in auto and homeowners’ coverage.
Analysts from AM Best recently warned that U.S. tariffs on imports from Canada, Mexico, and China will negatively impact the insurance industry. With vehicles continuing to be equipped with more advanced engineering and electronics, the cost of repairs and replacement parts is rising. U.S. auto insurance carriers will be closely monitoring supply chain issues, as tariffs can lead to higher costs for auto parts, extended repair times, and increased claim expenses. These factors contribute to rising premiums for policyholders, making it clear how tariffs impact insurance in the auto sector.
Homeowners insurance will also feel the strain. The construction industry relies on imported materials such as lumber, steel, and aluminum—all of which are subject to tariff increases. As the cost of materials rises, so do the expenses associated with home repairs and rebuilding after a loss. Insurers must account for these higher costs, leading to potential rate hikes for homeowners. Additionally, supply chain delays in obtaining materials could prolong repair timelines, increasing additional living expenses for displaced homeowners and further driving up claims.
Beyond auto and property insurance, commercial policies are also affected. Many businesses depend on imported goods, machinery, and materials, meaning any disruptions or cost increases can lead to higher claims, business interruptions, and greater financial strain on insurers. When businesses face economic uncertainty due to tariffs, they may adjust their coverage, opt for lower limits, or even delay renewals—all of which could impact the insurance market as a whole.
As most insureds are aware, auto and property rates have already been on the rise over the past few years. Any tariffs that remain in place will likely continue that trend, reinforcing the direct link between trade policies and insurance costs. For both individuals and businesses, understanding how tariffs impact insurance can help with planning for potential rate changes and coverage adjustments.
