New U.S. Tariffs: How They Impact Your Car and Home Insurance Costs

Recent tariffs on imported goods implemented by President Trump are creating ripple effects across the insurance industry, directly impacting both auto and home insurance rates. Understanding how these trade policies affect insurance premiums can help policyholders make informed decisions about their coverage and find ways to manage rising costs.

What Are Tariffs?

Before we dive in, let’s define what we mean by tariffs. Tariffs are taxes imposed on imported goods from foreign countries to regulate trade. Tariffs can also be used between governments as a negotiation tactic. These taxes typically represent a percentage of the item's cost and are collected by U.S. Customs directly from companies importing goods into the United States. When importers are forced to pay higher taxes on their products, their operational costs increase. To absorb these expenses, consumers typically end up paying more for the goods.

In this guide, we'll explore how these tariffs impact your car and home insurance costs, which vehicle parts and building materials are affected, and offer strategies to help you control insurance costs while maintaining adequate coverage.

Tariffs and Insurance

Since April 2025, a 10 percent universal tariff has been applied to most imported goods, with steeper tariffs of 25 percent targeting imported vehicles, auto parts, steel, lumber, and aluminum. At first glance, these trade policies may seem unrelated to your insurance policy, but they lead directly to higher premiums through increased repair and replacement costs.

Put simply, when the cost of vehicle parts and home-building materials rises, insurance companies face higher claim payouts. These increased costs eventually result in higher premiums, affecting auto and home policyholders everywhere.

How Tariffs Drive Up Auto Insurance Rates

Auto insurance premiums are closely tied to the cost of repairing or replacing a damaged vehicle. These new, higher tariffs significantly impact the price of essential vehicle components coming into the U.S. from the countries targeted: Mexico, China, Japan, Korea, and Canada.

Imported Auto Parts Affected:

• Engine components like pistons, valves, and sensors
• Electronic systems, including ECUs and infotainment systems
• Body panels and exterior trim pieces
• Brake components and suspension parts
• Transmission components and drivetrain elements

Impact on Popular Vehicles

Take the Honda Civic, one of America's most popular cars. This vehicle relies heavily on imported electronics and engine components that now face new tariffs. Similarly, the Chevy Silverado uses significant amounts of imported steel, aluminum, and electronic systems in its construction. For these vehicles, replacement part costs are expected to increase by 15-25 percent, which will directly impact collision and comprehensive claim costs. The tariffs also mean that most new cars will be of higher value due to the more expensive parts, which will also result in higher auto insurance premiums.

Consider Higher Coverage Levels

Even without the higher tariff-related costs, state-mandated minimum liability coverage may not provide enough protection when you factor in rising medical care costs. Consider liability limits of at least $100,000/$300,000/$50,000.

The coverage amounts break down as:

• $100,000 for bodily injury or death per person
• $300,000 for bodily injury or death per accident
• $50,000 for property damage per accident

Pro-Tip: Choose even higher limits if you need to protect more substantial assets.

Money-Saving Strategies

While you can't control tariff policies, you can take proactive steps to manage your insurance costs while making sure you’re adequately covered.

• Choose higher deductibles: Increasing your deductible from $500 to $1,000 or $1,500 can significantly offset premium increases. Ideally, you’ll want to have an emergency fund set aside in case you ever need to cover higher out-of-pocket costs.
• Optimize coverage limits: Check your coverage amounts to avoid paying for insurance you don’t need. For example, if your car’s older and no longer worth much, consider whether you need comprehensive and collision coverage.
• Bundle policies: Multi-policy discounts become even more useful as individual premiums increase. Combining auto and home insurance with the same company could help you save substantially.
• Take advantage of discounts: Reduce overall costs by applying every discount you qualify for. Wawanesa offers a variety.

How Tariffs Drive Up Home Insurance Rates

Like auto insurance, home insurance costs are rising due to tariffs on key construction materials. The most significant impacts come from:

• Steel and Aluminum: These materials are essential for structural components, roofing systems, and HVAC equipment. When your home suffers damage that requires steel beams, aluminum siding, or a new air conditioning unit, the repair costs will be substantially higher.
• Lumber: Tariffs on Canadian lumber continue to drive up construction costs, affecting everything from framing repairs to deck rebuilding after storm damage.
• Appliances and Home Systems: Many imported appliances and HVAC systems now carry additional tariff costs, increasing the expense of replacing damaged equipment after covered losses.

The higher prices on building materials create challenges for homeowners in two key ways. First, your dwelling coverage limits may no longer provide enough protection as the cost of materials and labor needed to rebuild your home increases. Second, repair costs following claims will be higher, potentially influencing future premium rates.

The same strategies that help keep auto insurance costs affordable can help lower your homeowners premium as well:

• Choose higher deductibles: Increasing your deductible from $500 to $1,000 or $2,500 can significantly offset premium increases. Ideally, you’ll want to have an emergency fund set aside in case you ever need to cover higher out-of-pocket costs.
• Bundle policies: Multi-policy discounts become even more valuable as individual premiums increase. Combining auto and home insurance with the same company could help you score significant savings.
• Take advantage of discounts: Reduce overall costs by applying every discount you qualify for. Wawanesa offers a variety.

Home Insurance Discounts

Check out the following suggestions on how to lower home insurance premiums:

• Install security systems, including monitored alarms and smart home technology
• Add safety features like smoke detectors, fire sprinklers, and impact-resistant roofing
• Look into a claims-free discount for maintaining a clean claims history
• Use a loyalty discount for long-term policyholders (if you qualify)

It’s also a good idea to get your home professionally appraised every 3-5 years to ensure your coverage is keeping up with your home’s higher value.

The insurance industry typically takes 12-18 months to fully adjust to new cost structures. This means that the impact on premiums from current tariffs may continue developing through 2026. For help reviewing your coverage, get in touch with one of our helpful Wawanesa agents. They can help you explore options to make sure you have the right coverage for your situation at the best rate possible.