How do tariffs impact insurance?

By now, pretty much everyone is familiar with tariffs. Like every other industry, the insurance sector faces serious impacts from the United States’ tariffs on Canadian goods and the resulting trade war. While it may take some time to determine exactly what those impacts look like, they’re not likely to be good.

But how will tariffs and trade wars affect your home and car insurance? Let’s take a look.

What are tariffs?

Tariffs are essentially taxes that one country places on goods imported from another country.

Theoretically, that means that tariffs only affect prices in the country that establishes them. For example, the US’s tariffs only apply to goods entering the US; they don’t directly affect goods within Canada or those entering the country.

In practice, however, the US’s tariffs have led many countries (including Canada) to set their own tariffs on goods coming from the US. Since Canada imports nearly $500 billion worth of goods from the US annually, there’s no escaping the impact.¹ While Canada’s retaliatory tariffs only apply to specific goods, Canadians have seen and will see rising prices in many places — including insurance.

How will tariffs affect insurance?

Put most simply, when the price of everything goes up, the price of insurance has to follow. Home and car insurance are primarily meant to insure physical objects (cars, houses, personal property, etc.). When the cost of repairing or replacing things increases, insurance premiums have to increase alongside.

Home insurance

Home insurance covers your house, and most of the moveable stuff inside it. This broad scope means that many different tariffs will likely impact home insurance costs.

• Tariffs on steel and aluminum products. Canada implemented a 25% tariff on these goods on March 13, 2025. Many building materials and tools fall within the scope of this tranche of tariffs and may lead to increased construction costs.² Building materials account for as much as one-third of property insurance costs.³
• Tariffs on miscellaneous goods. Also effective March 13 are 25% tariffs on a wide range of miscellaneous US goods, ranging from sporting equipment to ceramics to computer monitors. Having to replace these goods (assuming they come from the US) will be more expensive for insurance providers.²

Car insurance

Car insurance, as far as material goods go, is pretty much limited to covering vehicles. Unfortunately, vehicles find themselves right in the middle of the trade war. Car insurance is expected to be the hardest hit by tariffs.⁴

As of April 9, 2025, Canada has imposed a 25% tariff on vehicles that aren’t compliant with the Canada-United States-Mexico (CUSMA) trade agreement. It also applies to the US-sourced portion of a vehicle that is compliant. This tariff applies only to assembled vehicles, not auto parts. Approximately 10% of vehicles imported from the US are not CUSMA compliant.⁵ The tariffs on steel, aluminum, and other metals will also impact the purchase cost of new vehicles. Altogether, the purchase price of new vehicles will likely increase by anywhere from $3,000 to $12,000.⁶

Higher replacement costs for vehicles will have an impact on car insurance premiums. Car insurance providers will see their claim settlement costs rise and increase rates to cover those costs. There may also be supply chain disruptions, which could increase the cost and timeframe of repairs.

What are insurance providers doing?

Given the scope of the tariffs and potential supply chain disruptions, some price increases may be difficult to avoid for anyone. However, there are a few things that insurance providers are doing in response.

Mainly, that would involve seeking non-US alternatives throughout their supply chain. Whether auto parts for vehicle repairs or building materials for home repairs, there are opportunities to replace US-based suppliers with Canadian (or at least non-American) alternates.

How can you lower your premiums?

There isn’t a lot that insurance customers can do to address the root cause of trade-related premium increases. But, there are options for reducing one’s premiums regardless of the reason for any increase.

• Increase your deductibles. Though you’ll have to pay more if you make a claim, your premiums will be lower.
• Make sure you’re not overinsured. For example, complete a household inventory to ensure your home insurance’s personal property limit isn’t too high.
• Make changes to your home or driving habits. You may see lower insurance rates if you add certain safety features to your home, like backwater valves. If you elect to drive less, you can save money on your car insurance.
• Talk to your insurance provider. Perhaps there are additional discounts that you’re eligible for. In any case, they’ll be able to help you review your options and coverage limits to see if there are any opportunities for lowering your premiums.

Check out these resources for more tips on lowering your insurance premiums:

• How to save on home insurance
• How to save on car insurance

Sources

1. McNally, John. “Canada-US Trade: Getting Up To Speed.” Scotiabank, 31 Jan. 2025, www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.canada-and-us-economics-.canada-and-us-decks.trade-stats–january-31–2025-.html.
2. Department of Finance Canada. “List of products from the United States subject to 25 per cent tariffs effective March 13, 2025.” canada.ca, 12 Mar. 2025, www.canada.ca/en/department-finance/news/2025/03/list-of-products-from-the-united-states-subject-to-25-per-cent-tariffs-effective-march-13-2025.html.
3. O’Hara, Clare. “Homeowners face risk of higher insurance premiums as tariffs put pressure on building material costs.” The Globe and Mail, 5 Mar. 2025, www.theglobeandmail.com/business/article-homeowners-face-risk-of-higher-insurance-premiums-as-tariffs-put/.
4. Snape, Gia. “North American insurers brace for tariff shock.” Insurance Business, 8 Apr. 2025, www.insurancebusinessmag.com/ca/news/breaking-news/north-american-insurers-brace-for-tariff-shock-531418.aspx.
5. Van Dyk, Spencer. “Mark Carney says Canada to match vehicle tariffs in response to Trump levies.” CTV News, 3 Apr. 2025, www.ctvnews.ca/politics/article/mark-carney-says-canada-to-match-vehicle-tariffs-in-response-to-trump-levies.
6. Farooqui, Salmaan. “How exactly will tariffs affect car prices in Canada?” The Globe and Mail, 9 Apr. 2025, www.theglobeandmail.com/investing/personal-finance/article-prices-hikes-on-us-made-cars-caused-by-tariffs-likely-to-spill-into.

Want to learn more? Visit our Home Insurance Basics resource centre for dozens of helpful articles to guide you through the ins and outs of home insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.