A quiet year that may not stay quiet
For much of 2026, drivers got something they hadn't seen in a while: car insurance bills that held still. Insurify data put the national average for full-coverage insurance at a steady $187 per month through August. Liability coverage rose only slightly, from $98 to $99 a month. 4 That calm followed several years of steep premium increases. It has made many policyholders hope the worst is over.
Forecasters are now warning that the pause may be temporary, and the reason is trade policy as much as claims. Insurify's mid-year analysis projects that 32 states will see rate increases in the final months of 2026. Connecticut leads at 4%, followed by West Virginia at 3%. Delaware, Virginia, Washington, D.C., Kentucky, Nevada, Wyoming, and Illinois are each projected to rise about 2%. 4 The common thread in most explanations is the cost of fixing and replacing cars, which tariffs on imported vehicles and parts have pushed higher.
Which tariffs actually matter
The tariff picture is confusing, so it helps to be precise. The duties hitting auto repair are the 25% Section 232 tariffs on imported vehicles and auto parts, which took effect in April and May 2025. 2 They are separate from the tariffs the Supreme Court struck down in February 2026, and they remain fully in force. 2 Drivers who assumed the court ruling would bring relief at the body shop are likely to be disappointed.
The chain from tariff to premium is simple:
- Parts cost more. Tariffs raise the price of imported cars and components. 3
- Claims cost more. Higher parts prices inflate collision estimates and the payouts for totaled vehicles. 3
- More cars get totaled. Pricier repairs push more damaged vehicles past the point where fixing them makes financial sense. 2
- Premiums follow. Insurers eventually pass those higher claim costs on to policyholders. 1
Saleh Taebi, CEO of parts retailer USAWheels, told Insurify that rates have not yet fully reflected the tariffs. In his view, however, the cost pressure is already building throughout the automotive supply chain. 1
How big is the hit? Estimates diverge widely
On direction, the sources agree. On magnitude, they differ a lot.
| Source of estimate | Projected effect |
|---|---|
| Insurify baseline for 2026 | About 1% rise in full-coverage costs 1 |
| Insurify, if tariffs significantly raise repair costs | About 4% rise 1 |
| Some industry analysts | Roughly 8% above inflation and other cost pressures 1 |
| Autoinsurance.org | Up to 9% 3 |
The 9% figure comes from an analysis updated in June 2025, shortly after the tariffs took effect. 3 It reflects early worst-case thinking more than observed premium data. Insurify's numbers are more conservative, and its own monthly data shows rates mostly flat through late summer. 14
Our reading is that the higher estimates describe the full eventual pressure, while the lower ones describe how slowly that pressure reaches policyholders. Insurers generally need regulatory approval for rate changes and price policies on claims that lag behind parts invoices. That would explain why a 25% tariff can coexist with a flat national average for months. It also suggests the increases could build into 2027 rather than arriving all at once.
Not every driver will feel it equally
The impact varies by vehicle and by location. Autoinsurance.org expects SUVs to see the largest tariff-driven cost increases. It considers Tesla the brand least likely to be affected, presumably because of its domestic production. 3 Owners of imported models, or domestic models that rely on foreign parts, have the most exposure.
Geography matters too. Connecticut has posted the largest auto insurance rate increase of any state so far in 2026. Local analysis there links rising collision estimates and total-loss rates directly to the Section 232 duties. 2 The state also tops Insurify's list of projected late-year increases. 4 That makes it an early example of what tariff pass-through can look like.
What to watch
The stable national average is real, but it reflects the past more than the future. Tariff costs enter the system at the parts counter, show up in claims, and reach premiums last, often at renewal. Drivers who have seen flat rates this year should not assume next year's renewal will look the same. That applies especially to owners of SUVs or import-heavy vehicles, and to drivers in states already leading the increases. Shopping around at renewal will likely matter more as these costs work through the system.
The broader point is that claim frequency and severity are no longer the whole story behind car insurance pricing. Trade policy has become a direct input. As long as the Section 232 tariffs stay in place, they will keep putting upward pressure on premiums, even when the monthly averages look calm.
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