After nation-leading rate hikes for auto insurance in ’24, Minnesota may see mild increase this year

After punishing increases that gave Minnesota the nation’s highest average increases in auto insurance premiums last year, Minnesotans could see a small decline on premiums in 2025, new data show.

But tariffs on imported auto parts threaten to wash out that dip and nudge average bills upward instead. Insurers that cover the cost of auto repairs on thinning margins may see import taxes of up to 25% on foreign car parts, and decide to pass along some of that cost to customers, industry experts say.

“We don’t know how much insurance companies are going to eat some of that cost and how much they’re going to pass some of that along,” said Julia Dreier, Minnesota’s deputy commissioner of insurance.

Like the rising expense of property insurance, car premiums have gone up in Minnesota and across the country at a fast clip, because of several factors.

Spiking inflation bumped costs across the board. Climate change made hailstorms worse in Minnesota. Dangerous driving has fueled crashes. And modern vehicles’ complexity means they cost more to fix.

The added import tax on repairs with foreign components complicates a business model that succeeds by successfully pricing risk. In a report last week, car insurance analysis firm Insurify found the average auto insurance premium in Minnesota fell 7% in the first half of 2025. That’s in contrast to rate moves between 2023 and 2024, when the state led the U.S. with the rate of increase — 58% on average, according Insurify.

In all, Insurify projects tariffs could cause Minnesota car insurance to tick back up another 8% in the next few months, negating any relief residents felt this year. The average would end up 1% higher than last year by December, reaching $2,526 annually for full coverage of the average car. The estimate considers policies that cover bodily injuries up to $50,000 per person and $100,000 per accident.

Some insurers have said they will price in tariffs. The Trump administration’s fast-moving trade policy is challenging insurance companies and auto manufacturers on how to price out costs.

“Even though most people think of it like any other business, the margins are not all that big in insurance,” Brannon said.

The analysis was based on President Donald Trump’s latest auto tariff plan. It accounts for Canada’s and Mexico’s exemptions as well as lower duties on common auto exporters Japan, South Korea and Germany.

As modern vehicles become more sophisticated, beating a metal fender with a mallet is no longer a viable way to fix a car, said Aaron Cocking, president of the Insurance Federation of Minnesota, an industry trade group. Repairs generally have “skyrocketed,” Cocking said, as have claims brought on by severe weather like brutal hailstorms.

“Any additional cost that [means] these repair costs go up have to come from somewhere. And that somewhere is premiums,” he said.

Insurance companies are regulated at the state level. Earlier this year the Minnesota Department of Commerce warned that a hefty tariff increase could drive up the cost of insurance.

Auto rates have been on the rise consistently since 2020, Deputy Insurance Commissioner Dreier said. But how or when Minnesotans could feel any cost increase attributable to tariffs remains to be seen.

Companies file rates months in advance of what customers pay, she said, and many factors remain uncertain.

“There’s a fair amount of uncertainty still in how this is all going to play out over the next year or so,” she said. “But we’re watching it and continuing to do what we can to keep rates low for people.”

Minnesotans are taking notice of the ever-higher premiums when opening up statements from insurance companies, said Aric Sorenson, executive vice president of Twin Cities area firm Insurance Brokers of Minnesota.