Auto insurance rates have gone up sharply this decade and the question is why premiums have risen so quickly. Pres. Trump points to illegal immigration. But that doesn’t appear to be matched by the data. Headlight.News has more.
President Donald Trump toured Ford Motor Co.’s Rouge complex last month, home of the automaker’s big F-150 pickup.
Pres. Donald Trump has blamed illegal immigration for a variety of woes facing the U.S., including rising insurance rates.
If there’s one thing that everyone can agree on it’s that vehicle owners have seen a sharp rise in premiums since the beginning of the decade. But exactly what’s behind that surge?
But experts cited by the Associated Press blame the COVID pandemic, rather than immigration, illegal or otherwise, for the run-up, pointing to a surge in risky driving behaviors, such as speeding, as well as higher repair costs linked to parts shortages. Ironically, experts have warned that Trump’s tariffs on imported autos and auto parts could lead to further insurance rate hikes.
Pointing the finger
Experts reported a major surge in speeding during COVID.
The president is no friend to immigration and has backed a controversial crackdown that has resulted in hundreds of thousands of arrests since he returned to office in January 2025. He has pointed to illegal immigrants, in particular, for things like crime increases, competition for jobs competition, as well as strains on government and social services.
On Monday, however, he added increased car insurance, as well, pointing to a study by the Council of Economic Advisers using data from the Bureau of Labor Statistics.
“Car Insurance Premiums rose to RECORD HIGHS, forcing Law-abiding American Citizens to subsidize the ‘free riding’ Biden Illegals,” he wrote on Truth Social. “After over a year of ZERO ILLEGAL IMMIGRATION, and our highly successful efforts to REVERSE the Biden Invasion, Car Insurance Premiums have come tumbling down.”
The hard numbers
Even fender benders can be costly to repair.
Nationwide auto insurance rates rose 64% from 2020 to 2025, according to the Bureau of Labor Statistics – though the figure varied from state to state and even in specific cities. On average, American motorists now pay $2,250 to $2,350 annually.
The numbers began to flatten out in 2025, however, CBS News reporting the typical U.S. driver spending $186 monthly on premiums. Some insurance companies actually took steps to reduce costs, State Farm claiming an average rate reduction for its customers of 10% last year. And there are signs that rates are experiencing “negative growth” in 2026, according to the AP.
What was responsible for the initial surge? A variety of factors, experts note, though illegal immigration was far from a major issue.
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“Pure fiction”
Service, repair and insurance costs were hit hard by COVID-related shortages.
In a statement meant to back up the president’s social media post, White House spokesman Kish Desai claimed the ongoing immigration crackdown has resulted, among other things, in less roadway congestion and fewer crashes. He also cited the “removal of more than 20,000 non-English-speaking commercial truck drivers who posed safety risks on our roadways. These objective facts are lowering risks for American drivers on American roads — and thus lowering car insurance premiums.”
“This claim is pure fiction,” Michael Clemens, a professor of economics at Johns Hopkins University and a senior fellow at the Peterson Institute for International Economics, told AP. “It does not arise from any study by the White House, by the auto insurance industry, or even by anti-immigration pressure groups. It has no basis in anything but inflammatory statements that juxtapose two unrelated trends.”
The news service referenced a 2023 study in the Journal of Insurance Issues showing that undocumented immigrants do have a higher number of uninsured drivers, which can contribute to higher insurance costs. But Clemens said that this would have resulted in premiums going up just 0.7% during the Biden administration.
COVID – and Trump– share blame
Trump’s tariffs are raising prices not only on new vehicles but on vehicles service and repair parts.
The vast majority of experts dismiss illegal immigration as having any real impact on insurance costs. Instead, that cite the COVID-19 pandemic as the primary factor this decade.
Initially, government-ordered lockdowns led to a sharp decline in traffic, millions of U.S. motorists no longer commuting under work-at-home policies. That soon led to a surge in speeding an other risky behavior by those who still were on the road. The California Highway Patrol, for example, reported a record number of fines and arrests in 2020 and 2021 for motorists exceeding 100 mph.
Another factor: a pandemic-related shortage of spare and replacement parts, everything from sheet metal panels to microprocessors. The semiconductor shortage was so severe that it caused major automakers like General Motors and Toyota to shave millions of vehicles off production schedules. And, lower on the totem pole, repair shops often were forced to delay work following an accident while waiting for parts.
But while parts shortages have largely disappeared, there’s another problem related to crash repairs and here the president himself is taking blame.
Tariffs sharply increase repair costs
On the plus side, “Average auto insurance premiums have begun to stabilize, and….we are seeing average rate decreases being implemented across numerous states, as well as dividends being paid to policyholders by major auto insurers such as State Farm and USAA,” Mark Friedlander, a spokesperson for the Insurance Information Institute, a leading industry association, told the AP.
But insurance experts fear costs could again rise – or, at the least, the reduction in rates will slow – due to the Trump tariffs. Crash repairs are just one factor in determining insurance costs but when motorists do bring cars into the shop their vehicles often rely on foreign-made parts and components. Website Insurify estimated that for motorists who carry full comprehensive coverage, rates could come in about $200 more per year than they would be without the auto parts tariffs.
The actual figure is still uncertain, reflecting ongoing trade negotiations, as well as the pressure insurance companies are facing to hold back rate hikes, reported The Hill. But tariffs, should the costs be passed on, would appear to have a far more significant impact on auto insurance costs than illegal immigrants.
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