The North American car industry is facing challenges due to U.S. President Donald Trump’s tariffs, which are expected to impact not only those in the market for a new vehicle but also existing car owners. The Canadian Chamber of Commerce has warned that auto tariffs, along with tariffs on steel and aluminum, will lead to higher costs of insurance premiums and repairs for car owners in both Canada and the United States. The increase in car prices due to tariffs will result in higher repair costs, which in turn will raise insurance premiums for consumers. This could lead to premium increases of between three to eight percent as a result of the tariffs, according to experts.
Daniel Ivans, an insurance expert, explained that while the portion of insurance costs covering liability or injury coverage may remain unaffected, a quarter of the average premium goes towards covering physical damage to the vehicle. This includes costs related to collisions, accidents, theft, vandalism, hit and runs, or fires. Ivans predicts that this portion of the premium will increase as tariffs raise the costs of parts. Glen Hodgson, a senior fellow at the CD Howe Institute, estimates even steeper hikes in insurance premiums, potentially adding five to ten percent or more to car insurance prices due to the increased costs associated with owning a car.
If Trump’s tariffs go into full effect, with a 25 percent tariff on vehicles going both ways in North America, it could lead to higher auto prices and increased costs for car owners. Canadians may end up paying more for parts when taking their cars to the mechanic due to increased repair costs. Ivans highlighted that as the cost of parts increases, repair costs naturally rise as well. It is uncertain whether the inflationary impact of tariffs will lead to higher labor costs at car repair facilities if employees seek higher wages due to the rising cost of living. In light of potential premium increases, Ivans recommended shopping around for insurance rates depending on where in Canada one resides, as different provinces have unique insurance systems.
Consumers are encouraged to regularly review their insurance policies and consider shopping around for better rates, especially in Ontario where insurance is privatized. Ivans suggested utilizing online aggregators to compare rates and find the right insurance company based on individual needs and customer profiles. With potential premium increases of three to eight percent, or even higher, due to the impact of tariffs on the auto industry, taking proactive steps to find the best insurance coverage at the most competitive rates will be important for car owners in Canada. The uncertainties surrounding the full extent of the impact of tariffs on insurance premiums and repair costs emphasize the need for consumers to stay informed and proactive in managing their car ownership expenses in the face of these changes in the industry.
