The auto insurance industry is warning policyholders that tariffs could increase the cost everyone pays to insure their automobile insurance.
President Trump’s on-again and off-again tariffs are creating a lot of uncertainty. On Wednesday, he said he would pause tariffs on most countries, but he excluded China, threatening a 125% tariff on them.
While auto insurance rates in Florida are already soaring without the tariffs, the last thing drivers want to hear is that their policies will increase.
Experts predict tariffs could leave drivers paying as much as $200 more a year just to keep their cars insured.
That's because parts like these brake pads, once $85, are now expected to soar to over $100. So, it's going to obviously cost more to repair a car, and it's just one more thing people say is causing their money to dwindle.
Maryellen Butz knows tariffs will drive up her repair costs. An oil leak repair on Wednesday already cost her about $240.00.
“I don't have a paycheck to start with. I'm on social security, and that is all I get,” Butz explained.
President Trump is expected to slap tariffs on all auto parts imported into the United States.
Allen Smith with Terry Winter Auto Service in Fort Myers explained that a lot of auto parts are made in Mexico, Japan, China and Canada, and all of the countries have been threatened with tariffs.
Replacing damaged or worn-out parts will cost insurance companies more to replace.
A cost Smith confirmed ultimately will be passed onto drivers.
“It would be very hard for us to absorb 25%. I mean, we're going to try and stay as close to our margin as possible,” Smith said.
Replacing damaged body parts on the car will soar, too, as tariffs are placed on steel and aluminum.
About 50% of aluminum imports come from Mexico and Canada, and 35% of steel now comes from Canada.
Insurance agent Doug Nellans, who owns The Insurancenter in Fort Myers, is sounding the alarm and warning tariffs will hike auto policies — should Trump’s tariffs remain in place.
“This is going to lead to more expensive repair costs, which lead to higher claims costs for the insurance companies,” Nellans explained.
In fact, a study from Insurify predicted tariffs could increase the average $2,300 policy to $2,500 by the end of the year.
“I've decided maybe the Amish have the right idea with the horse and buggy,” Butz said.
There is a lot to keep up here with these imports. The tariffs are expected to go into effect on car parts on May 3. There are some ways to save yourself some money on auto insurance. We'll put some of those tips up on our Gulf Coast news app.
Insurance experts however warn that some tips to save money on policies include shopping around to compare rates, consider bundling your home and auto policies. Drivers can also consider increasing their deductible, which means you pay more of the repairs if you’re involved in a collision.