The Impact of Tariffs on Commercial Insurance Costs

Published in All Insurance Industry Insights on Thursday, March 27, 2025 by Don Patnode

Tariffs, or taxes on imported goods, affect more than just trade – they can also influence your commercial insurance premiums. When tariffs increase the cost of materials like steel, lumber, and auto parts, insurance companies may raise premiums for commercial property insurance, business interruption insurance, and commercial auto insurance.

How Tariffs Affect Your Insurance Rates:

• Increased Premiums: Higher material costs due to tariffs can raise repair and replacement expenses. As a result, businesses may face higher premiums for property and auto insurance and business interruption coverage
• Rising Claim Costs: With the increased cost of materials and labor, insurance claims (for property damage or vehicle repair) become more expensive, leading to higher premiums for businesses.
• Market Volatility: Tariffs create global uncertainty, which can cause insurers to adjust their risk models, potentially leading to fluctuating premiums and changes in coverage availability.

How to Manage Tariff-Related Risks:

• Diversify Your Supply Chain: Reduce reliance on countries with high tariffs by nearshoring or reshoring production to minimize tariff-related price hikes.
• Use Technology: Invest in AI and data analytics to improve supply chain visibility and create contingency plans for tariff disruptions.
• Adjust Contracts: Negotiate contracts with suppliers to include tariff clauses that help share the financial burden of tariff costs.
• Review Insurance Policies: Regularly review your insurance to ensure it covers tariff-related risks and consider specialized coverage like trade credit insurance.

Tariffs can increase insurance premiums and complicate claims. By diversifying supply chains and reviewing your commercial insurance policies, you can reduce exposure and ensure your business is adequately protected. Reach out to an insurance professional today to explore ways to mitigate tariff risks.

If you have any questions or need further clarification, please contact your supervisor.

Written by
Don Patnode