One of the more notable inflation readings in the March consumer price index, which came out Thursday, was for motor vehicle insurance. Prices in that sector actually fell — by 0.8%, seasonally adjusted.

Maybe you’re looking at your last car insurance bill and finding that hard to believe. That’s because the inflation index that includes car insurance is still 7.5% higher than it was a year ago.

Jeff Rieder knows firsthand why car insurance has increased. He leads benchmarking at Aon’s insurance consulting. He just replaced the bumper on his 2021 Ford Expedition — for $5,000.

“Cars are much more complex now, so even simple damages often will have sometimes two or three times the cost that they would have had previously,” he said.

Because a bumper nowadays might include fancy sensors and cameras. On top of that, the insurance market itself has been struggling, said Chase Gardner with Insurify, which calls itself a digital insurance agent.

“Car insurance has been in a state of near-crisis since the COVID-19 pandemic,” said Gardner.

There were the supply chain issues, the inflation that followed, and a post-pandemic spike in traffic fatalities. And since insurance companies have to get state approval for rates, it takes a while to react to market changes. So, yes — the drop last month is good news. 

“This dip is almost a response to trends that happened in 2023 and 2024 and we’re just now seeing those results,” said Gardner.

But it might be short-lived, said David Marlett, a professor of insurance at Appalachian State University.

“The tariffs are the big variable,” said Marlett. “So you could have the same type of car accident and what might have cost $1,000 six months ago now is going to be $1,000 plus whatever the impact of the tariff is.”

Because if the auto parts get more expensive, so will the car accidents.