How Tariffs Could Affect Your Automotive Business Insurance

As tariffs continue to shift the economic landscape, automotive businesses—from franchise dealerships and independent used car lots to repair shops and towing operations—may start to feel the effects not just in operations, but in their insurance premiums as well.

Here’s a breakdown of how new tariffs could impact your automotive business insurance, and what you can do now to stay protected.

1. Auto Insurance: Rising Vehicle and Parts Values = Higher Premiums

Tariffs on imported vehicles and parts mean the cost to repair or replace vehicles has increased—sometimes significantly. This directly impacts your auto insurance coverage:

• Are your on-lot inventories accurately insured?
  If your current coverage is based on outdated values, you could be underinsured.

• Parts shortages and higher repair costs can also drive up claims costs, which in turn impacts premiums for auto repair shops and towing companies.

2. Property Insurance: Higher Construction Costs Could Leave You Underinsured

Many automotive businesses rely on imported materials for buildings, signage, and equipment installations. Tariffs on these materials are pushing construction and repair costs up:

• Are your building limits still accurate?
  If you had to rebuild after a loss, would your current policy limits cover today’s inflated costs?

• Shops and service centers with heavy infrastructure should be especially mindful of proper property valuations.

3. Group Medical Plans: Increased Costs on the Horizon

Medical devices, equipment, and pharmaceuticals used in employee health plans are often imported. Tariffs on these items are raising overall healthcare costs:

• Fewer equipment upgrades and supply chain delays may reduce the quality of care.

• These added costs are often passed on to employers in the form of higher group medical premiums.

For automotive businesses with large technician or service teams, group health plans can be a major line item—so preparing now is key.

4. Workers’ Compensation: More Expensive Care, More Claims Risk

Tariffs also affect the workers’ comp landscape:

• Higher prices for medical treatment and equipment mean higher claim costs.

• Layoffs or reduced hours, which many companies may consider in response to rising costs, often lead to an increase in claims due to job dissatisfaction or safety issues.

Shops and businesses with tight labor margins or high employee turnover should pay close attention to how these changes might ripple through their workforce.

What Should You Do Next?

The best move you can make is to review your current insurance policies. Make sure:

• Your property and inventory values are up to date

• You’re not underinsured based on today’s increased costs

• You understand how your group health and workers’ comp policies could shift

At ALKEME Automotive, we specialize in insurance for the automotive industry. From dealerships to tow yards, we help ensure your coverage keeps pace with an evolving market.

Contact us today for a free coverage review.