Import Tariffs and their impact on Commercial Insurance

Changes in global trade policies and tariffs can have significant effects on U.S. companies, consumers, and the commercial insurance industry. By recognizing these risks and adopting proactive mitigation strategies, businesses can better navigate this evolving landscape.

Rising Insurance Costs

Tariffs have the potential to drive up premiums across various types of commercial insurance, particularly in property, auto, and business interruption coverage. Here’s how:

Commercial Property and Auto Insurance – Higher tariffs often lead to increased costs for essential raw materials like steel and lumber, as well as auto parts. As a result, construction and vehicle repair expenses rise, prompting insurers to adjust. To manage their risk, insurers may respond by raising premiums or tightening underwriting standards.

Business Interruption Insurance – Supply chain disruptions caused by tariff-related cost increases can leave businesses more exposed to operational delays. Insurers, recognizing this heightened risk, may increase policyholder premiums accordingly.

Increased Claims Costs

With tariffs driving up the price of raw materials, the cost of repairing damaged properties and vehicles also escalates. At the same time, labor shortages in construction and auto repair contribute to rising service costs. This combination makes claims more expensive, potentially leading to coverage gaps or higher out-of-pocket expenses for policyholders when major claims arise.

Market Uncertainty and Volatility

Tariffs can create broader economic instability, compelling insurers to reassess their risk exposure. This could result in stricter underwriting guidelines, fluctuating coverage availability, and shifting policy costs, making it more challenging for businesses to secure the coverage they need.

Navigating the Changing Risk Landscape

Businesses can implement various strategies to mitigate these risks, including strengthening supply chain resilience, adjusting operational processes, and reviewing insurance policies and contracts. For expert guidance, reach out to Concierge Insurance Group today.