Trade Policy as a Risk Factor: The Insurance Impact of Tariffs

Tariff-driven trade tensions are reshaping how insurers price coverage and policyholders manage risk, as supply chain delays and rising material costs strain claim resolution and underwriting profitability.

Take auto and property lines: Projections show personal auto insurance claims could increase by $7 billion to $24 billion as expected tariffs drive up vehicle values and repair expenses. In the commercial space, tariffs on construction inputs like steel and lumber may inflate reconstruction costs by 5% to 15%, forcing insurers to reassess rates and risk models. 

Tariff volatility is filtering through every stage of the insurance lifecycle, from underwriting to claims, investing and reinsurance. Even when tariffs are only proposed or partially rolled back during negotiations, the uncertainty they create can still disrupt risk forecasts. As premiums rise and coverage criteria get tighter, the need for proactive and strategic assessment of business risk becomes critical.  

As these pressures build across the insurance ecosystem, businesses and consumers are feeling the effects: higher premiums, longer recovery timelines and coverage that may no longer align with evolving operations. For risk managers and business leaders, this means rethinking how insurance fits into a broader risk strategy. 

Following are five key implications and the best practices that can help businesses mitigate heightened risks:

Premiums are climbing across core lines. As claim costs rise due to more expensive materials and longer downtime, insurers are passing those costs on. Property, commercial auto, and general liability premiums are trending upward, and in specialized sectors such as aviation, tariffs on aircraft parts and maintenance materials are adding further pressure, driving up insurance costs for both airlines and private operators.  

What can you do? Conduct an annual insurance audit with your broker to understand where rate pressure is likely to hit hardest. Use that review to negotiate policy terms, explore bundled solutions, or consider higher deductibles in exchange for lower premiums. 

Claims are taking longer to resolve. Supply chain disruptions caused by tariffs can delay repairs, extend downtime and drag out the claims process. This impacts cash flow, slows recovery and, in some cases, increases the cost of business interruption claims. 

What can you do? Build realistic timelines into your business continuity planning. Consider business interruption insurance with extended indemnity periods. Flag any critical dependencies in your supply chain that could create delays and discuss them with your insurer or broker. 

Existing coverage may no longer fit your operations. Companies reacting to tariffs by shifting suppliers, relocating production or using new logistics provers may unknowingly introduce new risk exposures. If insurance policies don’t reflect those changes, gaps can emerge.

What can you do? Update your insurer when you make significant changes to your operations, suppliers, or geographical locations. Schedule regular coverage reviews — especially after strategic pivots — to ensure that your insurance structure remains aligned with your business footprint. 

Specialized coverage is gaining importance. Some tariff-related risks — such as supplier shutdowns or political instability in sourcing regions — fall outside standard policies. Addressing these blind spots requires more specialized coverage.

What can you do? Work with your adviser to determine whether contingent business interruption, trade credit or political risk insurance should be added to supplement your core program.

Risk strategies need to be reassessed proactively. Traditional annual renewals are no longer sufficient in today’s volatile environment. Businesses need to reassess risk strategy more frequently, especially when global trade conditions shift quickly. 

What can you do? Treat insurance like a living document. Mid-policy reviews, risk modeling updates and quarterly check-ins with your broker can help you stay protected as external conditions change. Ask about flexible policy structures that can adjust mid-term.

Now is the time to ask hard questions, reassess assumptions and ensure that your insurance program evolves in step with the world around it. Your broker should be more than a policy provider. They should be your strategic partner in navigating this risk. 

Jeff Lang is president, retail property & casualty at Venbrook.