Colorado Car Insurance Among Nation's Costliest as Tariff Impacts Loom

Colorado ranks as the seventh most expensive state for car insurance nationwide, with average full-coverage premiums significantly above the national average. While car insurance rates in Colorado have remained stable in the early part of 2025, projections indicate an increase through the remainder of the year driven by factors such as inflation, claims payouts, and the impact of tariffs on auto repair costs. Insurify's analysis suggests that without tariffs, Colorado rates could rise by approximately 4% by the end of 2025; however, if tariffs influencing the cost of foreign-sourced car parts persist, rate hikes could reach up to 7%. This contrasts with other states like Michigan, which have experienced sharper increases, such as a 14% rise in the first half of 2025.

The average cost of full-coverage car insurance in Colorado is $3,230 annually, about 21% higher than the U.S. average of $2,679. Meanwhile, minimum coverage premiums in Colorado are slightly lower than the national minimum coverage cost. Monthly, this translates to roughly $269 for full coverage and $48 for minimum coverage. Despite the currently stable pricing, ongoing supply chain challenges and insurer losses are expected to contribute to upcoming premium increases.

Estimating tariff impacts on insurance rates is complex due to regulatory oversight requiring insurers to demonstrate sustained cost increases before rate adjustments are approved. Insurify projects that Colorado auto insurance rates may increase by 3% to 5% by the end of 2025 accounting for potential tariff influences. Nationally, continued tariffs could raise average full-coverage premiums to $2,472, up from a forecasted $2,402 without tariff-related adjustments.

Overall, Colorado's insurance market is navigating the delicate balance of maintaining rate stability amid inflationary pressures and external supply factors. Regulatory frameworks play a key role in moderating how quickly insurers can pass increased costs to consumers, particularly regarding tariffs. These dynamics highlight the importance for insurance professionals and stakeholders to monitor tariff policy developments and supply chain trends impacting claims costs.