Car insurance costs could rise 7% by year's end amid tariffs: Analysis

(NewsNation) — Car insurance premiums have skyrocketed in recent years, and President Donald Trump's tariffs could drive them even higher.

The cost of full-coverage car insurance could jump 7% to an average of $2,472 a year by the end of 2025 if prolonged tariffs lead to significant insurer losses, according to a new Insurify analysis.

Even without tariffs, drivers can expect a 4% rate increase in the second half of the year, the insurance comparison site projected in its forecast.

In some states — like Rhode Island, Michigan, Maine and Delaware — insurance costs could be up more than 12% by year's end.

The latest projections mark a sharp turnaround from the first half of 2025, when car insurance rates held steady nationwide and even fell in 27 states, Insurify said.

Now, tariffs on auto parts and inflation are threatening to derail the positive trend.

"The U.S. has imposed several rounds of tariffs that raise the cost of auto parts, thus increasing the cost of repair claims for insurers," Insurify noted. "[Insurers] could raise premiums to align their rates with this additional financial risk."

If that happens, it would be another setback for drivers, whose annual insurance costs shot up more than 40% — about $700 — from June 2022 to June 2024, according to Insurify.

Higher labor costs, pricier parts, tech-heavy vehicles and extreme weather have all fueled the rise.

Data from the Insurance Information Institute (Triple-I), an industry trade group, shows auto claim severity — the average cost of a claim — has increased in recent years. In 2023, the average auto liability claim for property damage was $6,551, up about 40% from $4,689 in 2020. Collision claims rose by a similar margin over that period, according to Triple-I.

Still, tariff-induced auto insurance hikes aren't guaranteed. Regulators could push back on increases, and some insurers may have already factored tariffs into their rates.

Part of the uncertainty stems from the tariffs' unpredictability. Trump recently announced deals with Japan, South Korea and the European Union that reduce auto tariffs from 25% to 15%.

According to AAA's latest 2024 study, the total cost to own and operate a new vehicle is now $12,297 per year, or about $1,024 per month.

The most expensive states for car insurance in 2025

Inflation and insurer losses could cause average rates to rise in all but four states by the end of 2025, Insurify's analysis found.

Maryland recently overtook New York as the most expensive state for car insurance, with average premiums of $4,093 per year as of June — up 20% from summer 2024, Insurify said.

New York ranks second, where the average annual cost is $3,724, followed by Delaware ($3,366) and Rhode Island ($3,331).

Florida, known for its damaging storms, is the most expensive state for auto insurers but ranks 9th for drivers with average annual premiums of $2,912 in June — down from a peak of $3,250 in August 2024, per Insurify data.

On the other end of the spectrum, New Hampshire has the cheapest premiums on average at $993 per year. Wyoming ($1,172), North Dakota ($1,237) and North Carolina ($1,250) were also among the most affordable states.

The average cost of full-coverage car insurance in the U.S. was $2,310 a year as of June.

10 states with the highest average annual car insurance premiums as of June 2025, according to Insurify

1. Maryland: $4,093

2. New York: $3,724

3. Delaware: $3,366

4. Rhode Island: $3,331

5. South Carolina: $3,202

6. Nevada: $3,159

7. Michigan: $3,131

8. Georgia: $3,025

9. Florida: $2,912

10. Colorado: $2,801

Washington, D.C., ranks second at $3,780 but was excluded because it's not a state.