Author: Tye Hardin
If you run a business in Central Texas, you’re no stranger to change. Whether it’s navigating severe weather, tracking fuel prices, or managing a workforce stretched thin, 2025 has already asked a lot from Austin business owners. Now, add one more layer to the mix: tariffs.
Federal tariffs aimed at supporting U.S. industries are also creating some unexpected effects. They’re raising the cost of imported goods, materials, and equipment, which is quietly reshaping insurance costs across the region. And while it may not grab headlines, the effect on your premiums and coverage can be significant.
Let’s take a closer look at how these changes are affecting Central Texas businesses and what you can do to stay ahead.
Commercial Auto Insurance: Higher Repair Costs, Higher Rates
Whether your company runs a fleet of trucks between San Marcos and Round Rock or relies on vans to serve clients across the Austin metro, commercial auto coverage is likely costing more this year.
With tariffs on imported vehicles and parts climbing as high as 25%, the price of repairs has followed suit. And when repairs get more expensive, insurers adjust their rates to match. Industry analysts predict commercial auto premiums could jump between 6 and 10 percent by the end of 2025.
For vehicles loaded with advanced technology, those repair costs rise even faster. That’s especially relevant in Central Texas, where businesses often operate newer, tech-enabled fleets to keep up with demand and efficiency standards.
Commercial Property Insurance: Construction Costs Are Up
Central Texas commercial property owners are seeing another kind of pinch. Tariffs on building materials like steel and lumber are pushing construction costs higher. So when a hailstorm damages your roof or a fire hits your warehouse, the repair tab is more than it used to be.
That increase is making its way into your property insurance premiums. And because Austin and Central Texas are no stranger to severe weather, insurers are paying closer attention to local risk profiles and raising rates accordingly.
Worse yet, supply chain slowdowns are extending repair timelines. That means more businesses are filing for business interruption coverage or paying out of pocket to keep operations going during extended delays.
Business Interruption Coverage: Global Delays Hit Local Bottom Lines
Even if your operation is firmly rooted in Texas, your supply chain might stretch across the globe. When tariffs slow the flow of imported goods or make them more expensive, it can interrupt production or delay services especially in manufacturing, tech, and construction.
Insurers have started tightening the rules around business interruption claims, especially for companies that rely heavily on overseas vendors. Premiums are rising, and underwriters are asking more questions before offering this type of coverage.
If your vendors, raw materials, or equipment come from overseas, now’s the time to assess how delays might affect your business. Don’t wait until a shipment gets stuck at a port to find out your coverage isn’t strong enough.
Trade Credit & Political Risk Insurance: Growing Interest, Growing Cost
As international trade becomes less predictable, more Central Texas businesses are turning to trade credit and political risk insurance. These policies help protect against non-payment from overseas customers or sudden shifts in foreign government policy.
It’s a smart move, especially for regional exporters or those working with international manufacturers. But like everything else in a high-demand market, these policies are getting pricier. Expect more scrutiny and longer underwriting timelines.
Less Coverage, More Risk: A Tough Choice for Business Owners
With costs rising across the board, some business owners are being forced to make hard calls. That might mean raising deductibles, cutting back on coverage, or delaying policy renewals just to manage cash flow.
But scaling back protection could leave your business exposed. Whether you operate a construction firm in Temple, a logistics hub in Georgetown, or a fast-growing startup in Austin, the cost of being underinsured could far outweigh the short-term savings.
Carriers are responding, too. Many are revising their pricing models to reflect inflation and global pressures. Expect more questions during renewals, higher thresholds for insurability, and a sharper focus on Central Texas industries with heavier risk profiles.
What Central Texas Businesses Can Do Right Now
You can’t control federal trade policy, but you can adapt your insurance strategy. Start with these four steps:
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Recheck your limits. If your vehicles or buildings are worth more than they were a year ago, make sure your coverage keeps up.
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Review your supply chain. Identify which vendors or materials are most affected by tariffs and consider diversifying where possible.
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Ask about trade credit insurance. If your receivables are tied to international customers, this coverage can help reduce financial exposure.
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Plan for delays. Business interruption policies should reflect realistic rebuild times and extended downtime. Many don’t.
Let’s Revisit Your Coverage for 2025
Tariffs may be aimed at protecting the economy, but they’re also changing how Central Texas businesses manage risk. Today, the right insurance strategy isn’t optional. It’s how you stay protected.
Watkins Insurance Group has been in Austin since 1949. We understand what local businesses are facing. From navigating supply chain uncertainty to keeping your premiums under control, we’re here to help you adjust with clarity and confidence.
Let’s talk. Schedule a policy review today and find out how smarter coverage can help protect your people, your assets, and your future.
Tye Hardin is an insurance advisor based in Austin, Texas. With experience spanning political internships, small business ownership, and a strong focus on contractor and commercial coverage, he offers a practical, relationship-driven approach to protecting Texas businesses.
