2 Ways Trump Tariffs Are Raising Auto Insurance Costs (And 10 Ways to Save)

Since President Donald Trump announced plans to implement tariffs on imported goods, experts have predicted that costs of many goods are likely to increase. Auto insurance is one overlooked area where prices could climb.

Find out more about why car insurance costs might soon be on the rise, as well as how to save on car insurance if prices move higher.

Tariffs increase the cost of auto parts

Tariffs are expected to push up the cost of auto parts. For example, tariffs on steel and aluminum should make these parts more expensive.

Higher costs for auto parts makes it more expensive to repair and maintain vehicles. When repair costs rise, insurers often have to pay out more per claim.

As these costs increase, insurance companies are likely to boost insurance premiums to compensate for those expenses.

Tariffs boost the cost of foreign cars

Additionally, imported cars will become more expensive to purchase due to tariffs. That will make these cars costlier to replace in the wake of an accident.

This is another cost that insurers are likely to pass on to policyholders in the form of higher rates.

Even if your insurance costs don't rise overnight, it's unlikely that insurers will shoulder the burden of higher car repair and replacement costs. Instead, insurance premiums will rise over time to compensate for increased financial risks.

Ultimately, the costs are likely to be passed on to drivers, most of whom already face substantial insurance costs.

Tips to cut your auto insurance costs

With car insurance rates on the rise, you need strategies to help cut costs so you can claw back some savings. Here are some tips for cutting auto insurance costs so you can get ahead financially.

1. Shop around and compare quotes

The most effective way to save money on car insurance is to shop around.

Each insurance company has its own method of setting rates. Shopping around allows you to find the company that offers the most affordable premiums for your situation.

Typically, you can gather multiple quotes online to streamline the process.

2. Increase your deductible

A deductible represents the amount of money you'll have to pay toward a claim before the insurer kicks in for covered damages. Generally, insurance companies offer lower premiums to drivers who opt for higher deductibles.

Locking in the upfront premium savings might make sense as long as you can afford to cover a higher deductible in the event of an accident.

3. Ask about discounts

Most insurance companies offer a wide range of discounts to policyholders.

For example, you might score savings based on your military history or record of driving safely. Having the right safety features in your car can also net you a price break on coverage.

It never hurts to ask for a discount, so talk to your agent or a company representative to see if you qualify.

4. Bundle your coverage

People who purchase multiple insurance policies — such as auto insurance and homeowners insurance — from a single insurer often get a discount for doing so.

Buying several policies in this way is known as "bundling coverage." Check with your insurer to see if it offers a discount for bundling.

5. Drop optional coverages

When insurance costs are high, you might consider dropping optional coverages.

For example, if you have an older vehicle, you might opt to drop comprehensive or collision coverage. This will save you money.

Of course, it also means that while you will still have coverage for damage to the vehicles of other drivers, you will have no coverage for your own vehicle. So, don't drop optional coverages unless you are sure you are comfortable with the decision.

6. Take a defensive-driving course

A defensive-driving course gives you a chance to brush up on your driving skills.

In addition, if you successfully complete an approved defensive driving course, your insurance company might give you a discount on your premiums.

7. Drive less — and find an insurer that rewards that behavior

If you don't drive that often, consider switching to a pay-per-mile auto insurance company. This style of auto insurance can be more cost-effective for those who drive infrequently.

8. Pay in full upfront

Many insurance companies offer a discount to policyholders who choose to pay for their entire policy premium upfront rather than in installments.

So, if you can afford to pay your bill all at once, you might get to keep more cash in your pocket.

9. Keep your driving record clean

Safe drivers typically receive the most affordable car insurance rates. So, keep your driving record free of at-fault accidents and moving violations such as speeding tickets.

10. Agree to having your driving monitored

Many insurance companies offer a discount to drivers who commit to a telematics program that allows the insurer to monitor their driving habits.

If you make safe driving decisions, you'll likely enjoy lower rates. Before taking this step, you will need to decide whether you are comfortable giving up a little privacy in exchange for lower rates.

Bottom line

Auto insurance costs may soon be on the rise. But you don't have to sit back and accept higher rates.

Comparing quotes from multiple providers can help you find a cheaper auto insurance policy. You also might lower your costs by using the other tips on this list.