CT auto insurance rates headed for increases in 2025. Here’s why and what could drive it even higher

Motor vehicle owners in Connecticut — stunned by soaring auto insurance rates last year — appeared headed for some relief in 2025 until the forecasts hit a potential new bump in the road: tariffs.

“We’re projecting slightly above average increases, but still significantly lower cost increases than in recent years,” said Chase Gardner, a data insights analyst at Insurify, an online insurance marketplace based in Cambridge, MA. “The one wild card here is tariffs.”

Last week’s order by President Donald Trump imposing a 25% tariff on steel and aluminum imports is expected to increase the cost of manufacturing motor vehicles and the parts that repair them.

Vehicles with higher values would cost more to insure and more pricey repair parts push up damage claims.

Trump also threatened wide-ranging tariffs on both Canada and Mexico, two neighboring trading partners that figure heavily into the auto parts industry. Those tariffs — aimed at controlling immigration at the border and the flow of the deadly drug fentanyl into the U.S. — are now in the midst of a 30-day pause.

How quickly the tariffs — essentially a tax on imports — would trickle down to auto insurance rates is unclear. A lag between tariffs affecting the auto industry and insurers securing approvals for rate increases from state regulators could push the impact into 2026, experts say.

Insurers “are watching very carefully what is happening and trying to figure out how they will contain costs,” George Bradner, director of the Connecticut Insurance Department’s property and casualty division, said.

So far, at least, Connecticut motor vehicle owners will still see premium increases this year, but more moderate than throughout most of 2024, according to an analysis by Insurify.

Auto insurance rates in the state are now forecast to rise an average of 6% this year for full coverage, after a bruising average 18% in 2024. The average annual cost for full coverage, which includes liability, could rise to $2,600 in 2023, compared with $2,443 the previous year.

Nationally, auto insurance rates for full coverage are forecast to rise 5% this year, compared with 15% in 2024. The average annual cost would rise to $2,435 in 2025, compared with $2,313 last year, according to Insurify.

The cost of insuring a motor vehicle has skyrocketed 42% since 2022 as the nation emerged from the pandemic. Those increases were certainly eye-catching when for most of the last 25 years, the average increase nationally was between 2% and 3%.

A complex calculus

Experts say the jump in rates is part of a complex calculus coming out of the pandemic.

Supply chain disruptions pushed up prices of both new and previously-owned cars — and the cost to repair them. That came on top of an already developing trend of increasingly sophisticated technology in cars. A shortage of technicians to make those repairs increased labor costs.

A radical shift in driving habits also is partly to blame. Traveling at speeds well above the legal limit has become more common, leading to increased crashes with more extensive damage.

In Connecticut, there is another factor that has contributed to insurance rate increases: auto theft.

According to the National Insurance Crime Bureau, there was a 33% increase in thefts in 2023, rising to 9,442, compared to 7,091 in the previous year. The jump compares with just 1% nationally, according to the bureau. The 2023 statistics are the latest available from the bureau.

The Hartford-East Hartford-Middletown metro area saw a 52% increase in the same period, soaring to 3,245 from 2,138 in 2022.

“Vehicle thefts have serious impacts that reach beyond those who are victimized by theft,” Nicholas Zeitlinger, a bureau spokesman, said. “Increases in thefts leads to both the insurance industry and the average policyholder bearing the cost of the crime through increased rates and investigations.”

An auto policyholder’s rate and premium is determined through an analysis of driving record, credit score and other factors. But layered into those components are industrywide costs driven by a general increase in crashes, thefts and, potentially tariffs.

Consumer advocates say the public is suffering under the weight of spikes in insurance premiums, which have outpaced the broader inflation in the economy. They say insurers are quick to seek rate increases as inflation rises but slow when it goes in the opposite direction.

The most recent peak in the annual inflation rate — the general rise in the price of goods and services as measured by the Consumer Price Index — was 8% in 2022. The rate now stands at 3%.

But the insurance industry argues that easing of inflation does not mean the cost of good and services are necessarily coming down.

‘The domino effect’

In 2024, the state insurance department received 126 filings from insurers for auto insurance rate changes, with an average increase of 8.9%. That compares with 138 filings in 2023 and an average increase of 11.2%, according to the department’s annual report of its property and casualty rate reviews.

Last year, the rate requests ranged from 2.4% to 42.1% for full coverage auto policies. Eight were withdrawn after questions were raised by the department seeking justification about what drove the requests.

So far this year, the department said there have been 27 filings, with an average increase of 5.1%. The largest increase was 16%, but the majority were between 4% and 6%, the department said.

The insurance department’s Bradner said he doesn’t believe the state is approaching the levels of the past two years, as it heads into 2025.

“But a lot really depends on what happens with the tariffs,” Bradner said.

During his first presidential administration in 2018, Trump imposed a 25% tariff on imported steel and a 10% tariff on aluminum, kicking off a trade war with various countries. In turn, Canada rolled out its own tariff on steel and aluminum. After a little over a year, the United States-Mexico-Canada Agreement removed the tariffs.

But from 2018 to 2019, when the tariffs were active, Ford and General Motors raised the costs per vehicle by $700, said Shannon Martin, an insurance analyst at bankrate.com.

“And that was just one tariff on one part of the vehicle,” Martin said. “So we have that, combined with these Canadian and Mexican tariffs. We’re looking at cars being a lot more expensive and, of course, the cost of insurance.”

Tariffs can touch off shipping and repair delays as new suppliers of auto parts are sought to circumvent the tax. Supply chains are disrupted, causing competition for auto parts, making them harder to obtain and likely at a higher price, Martin said.

Martin said vehicle part shortages can delay repairs after a crash, causing other insurance-related headaches for consumers.

“The domino effect causes a shortage of rental cars and pushes drivers past the rental window allowed by carriers,” Martin said. “As a result, drivers may be forced to pay out-of-pocket for rental cars for a longer period and likely at a higher rate.”

Kenneth R. Gosselin can be reached at [email protected].

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