Getting behind the wheel is about to get a little more expensive. Tariffs could raise the price of car insurance by nearly ten percent later this year.
Getting behind the wheel is about to get a little more expensive. Tariffs could raise the price of car insurance by nearly 10% later this year.
It’s a snowball effect of the 25% tariffs on imported cars and car parts. If car parts are more expensive or take longer to import, cars then cost more time and money to repair.
Nevada has some of the highest auto insurance rates in the country. This isn’t the news drivers or body shops want to hear.
Izzy’s Auto is experiencing the effects of the tariffs firsthand. (Sunny Tsai / FOXBusiness)
“We can only do so much in order to survive because we still have overhead and bills and things that we have to pay,” said Eric Randolph, co-owner of Izzy’s Auto.
Randolph’s shop has been dealing with the side effects of the tariffs firsthand.
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“It’s been a lot of raises in the pricing, which causes us to have to raise the prices for our clients,” said Randolph.
The higher prices are a result of a trickle-down effect from the original supplier.
If car parts are more expensive, or take longer to import, cars then cost more time and money to repair. (Sunny Tsai / FOXBusiness)
“You have the actual supplier, then the supplier goes to the vendor, then [the] vendor sells to the different shops and customers, so then their prices are raised. And then when it reaches the consumer, by the time it’s there, it’s about 100 to maybe 110% markup just for the stores, for the small businesses to make a profit,” said Randolph.
Not only are prices higher for foreign car parts, there’s also a slowdown in the supply chain.
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“With that vehicle that we’re working on, it’s been probably like maybe four weeks. We were supposed to have a parking time of two to three days. We’re at a four-week hold up right now,” said Randolph.
Increasing car parts prices goes hand-in-hand with your insurance bill.
Not only are prices higher for foreign car parts, there’s also a slowdown in the supply chain. (Sunny Tsai / FOXBusiness)
“When you get into an accident, your insurer often has to pay to replace the auto part. And if auto parts were more expensive because it comes from out of the country, then those costs often get passed on to consumers…the average popular new car would see about a 15% increase because of tariffs and in terms of insurance, it would go up about six percent year over year on top of what it was already going to up” said Matt Brannon, Insurify data journalist.
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And those higher prices could affect what people are driving.
“More people cannot afford to pretty much go out and buy a car, so they have to depend on rental services,” said DeAndre Johnson, owner of JS Rideshare Rentals.
JS Rideshare Rentals has seen more demand for business recently. (Sunny Tsai / FOXBusiness)
Even though Johnson’s car rental company is also dealing with long waits and higher prices for parts, the shop has actually seen a demand in business.
“It caused us to have more customers. It also drove, like I said, it drove our business, the valuation, so our business is automatically worth more now because car prices are up,” said Johnson.
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Insurance experts say insurance companies can’t raise rates overnight, and most consumers won’t notice changes in their bills until the end of the year at the earliest.