Recent years have seen a sharp rise in auto insurance premiums, and there are concerns that tariffs tied to the Trump administration could contribute to even higher costs.
By the end of 2025, average car insurance premiums might hit around $2,472, according to forecasts. Drivers are bracing for an anticipated 4% increase in rates happening later this year, regardless of tariffs.
In particular, states like Rhode Island, Michigan, Maine, and Delaware may experience rate hikes exceeding 12% by year-end.
Interestingly, some projections indicate a significant shift for car insurance rates by mid-2025, with overall costs stabilizing in many areas, and some states even seeing decreases.
However, inflation could disrupt this positive trend, as increased repair costs associated with several tariffs are affecting insurance companies. Analysts suggest that insurers might raise premiums to cover these added financial burdens.
Data from Insurify indicates that if these scenarios play out, it will worsen the situation for drivers, who have already seen their annual insurance costs rise by over 40% from mid-2022 to mid-2024.
Factors like rising labor costs, pricier parts, and severe weather events have all contributed to this increase. Industry data shows a notable uptick in the average cost of car damage claims. In 2023, these claims averaged $6,551—up about 40% from $4,689 in 2020, with similar increases noted for collision claims.
Still, it’s uncertain if the potential tariff-driven hikes will be fully realized. Regulatory bodies might push back against these increases, and some insurers might already include the fees in their pricing structures.
The unpredictability surrounding tariffs adds to this uncertainty. Recently, Trump announced trade deals that could potentially reduce auto part tariffs from 25% to 15% with countries like Japan, South Korea, and the European Union.
According to AAA’s latest research, the annual cost of owning and operating a new vehicle has climbed to $12,297, averaging roughly $1,024 monthly.
The Most Expensive States for Car Insurance in 2025
Insurify’s analysis suggests that inflation and losses suffered by insurance companies may lead to rising average premiums in nearly all states by the close of 2025.
Maryland has recently surpassed New York as the priciest state for auto insurance, with an average yearly premium of $4,093 in June—a 20% increase from the summer of 2024. New York follows with an average of $3,724, then Delaware at $3,366, and Rhode Island at $3,331.
Interestingly, Florida, known for frequent storms, ranks highest in terms of auto insurance companies’ concerns, while it holds ninth place for average premiums, which were around $2,912 in June, down from a peak of $3,250 in August 2024.
On the cheaper end, New Hampshire offers the lowest average annual premium at $993, followed by Wyoming at $1,172, North Dakota at $1,237, and North Carolina at $1,250.
Overall, the average cost of full coverage auto insurance in the U.S. was reported to be $2,310 per year as of June.
The ten states with the highest average annual car insurance premiums, according to Insurify, are:
- Maryland: $4,093
- New York: $3,724
- Delaware: $3,366
- Rhode Island: $3,331
- South Carolina: $3,202
- Nevada: $3,159
- Michigan: $3,131
- Georgia: $3,025
- Florida: $2,912
- Colorado: $2,801
Washington, DC, while recording an average premium of $3,780, is excluded from this list as it is not classified as a state.
