Could U.S. tariffs on auto parts push up your car insurance premium at renewal?

Auto insurers base premiums partly on the cost to repair or replace a vehicle after a claim —when that figure rises, insurers often seek rate increases from provincial regulators. Many provinces have already approved increases in recent years, and the tariff environment signals further pressure ahead.

This doesn’t mean every driver will see an immediate increase. Rate changes need to go through a regulatory approval process first, and timing varies by province, insurer and policy type. However, if your renewal is due in the months ahead, it’s a good idea to plan ahead.

Why parts costs matter to your insurer

Canada imports a significant share of its auto parts from the United States. Under the tariff measures introduced in 2025, many of those parts now face additional duties at the border, increasing costs for repair shops and auto body facilities across the country.

When you file a claim, your insurer pays the repair bill — including both labour and parts — which can become pricey quite quickly. For example, if a bumper assembly or sensor array is now 20% more due to tariff-driven supply chain disruptions, the insurer absorbs that price hike across thousands of claims. Over time, costly payouts affect their profitability. When loss ratios exceed expectations, they typically apply to regulators for permission to increase rates.

How rate increases actually reach your policy

In Canada, auto insurance is provincially regulated. Providers can’t simply raise premiums whenever claims become costlier. Before they make any rate change, they must file an application with the appropriate regulator, such as the Financial Services Regulatory Authority of Ontario (FSRAO) or the British Columbia Utilities Commission (BCUC) in B.C.

As a result, today’s tariff-driven pressures may not show up in your premium tomorrow. It can take months, and sometimes longer, for higher repair costs to work their way through the regulatory system. That said, insurers don’t wait around until the losses pile up. If current trends point to future claims inflation, they will often file rate applications in anticipation of steeper expenses.

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Which drivers face the most exposure to higher rates?

Drivers with newer vehicles, particularly those with advanced safety technology, tend to see higher repair bills after collisions. A fender-bender that would have cost a few hundred dollars to fix on a 2010 sedan can run several thousand dollars on a 2023 model equipped with parking sensors, cameras and radar modules embedded in the bumper.

Urban drivers may also face greater exposure. Higher traffic density tends to result in more low-speed collision claims, which are exactly the types of repairs most affected by rising parts prices. Comprehensive coverage can also become more expensive when replacement parts are harder to source or are more expensive than before. Claims involving theft, vandalism, hail damage, or falling objects all depend on the availability and price of the necessary components.

Leased or financed vehicles often carry mandatory and comprehensive collision coverage as a lender requirement, leaving drivers little room to reduce exposure by dropping coverage tiers.

What you can do before your next renewal

Rising repair costs don’t automatically mean your premium will increase, but they do strain the insurance system. The good news is that you still have options.

If your policy is up for renewal in the coming months, now is a good time to take a proactive look at your coverage and pricing. Depending on where you live, by taking a few simple steps, you may be able to avoid some of the impact of higher rates:

• Get at least three quotes before renewing. Premiums for identical coverage can vary by hundreds of dollars between insurers.
• Review your deductibles. Increasing your collision or comprehensive deductible from $500 to $1,000 will often reduce your annual premium.
• Ask about telematics insurance. Some insurers offer discounts for safe driving habits or lower annual mileage.
• Bundle your home and auto insurance with the same provider, if possible, to qualify for a multi-policy discount.

While you may not have control over tariffs or repair costs, you do have authority over how you shop for coverage. Taking a few minutes to compare quotes, review your deductibles and ensure your policy still meets your needs could reduce the impact of any future rate increases.