The butterflies you get when you buy a new car are starting to fade for most Arkansans when they realise you need insurance to drive it off the lot.
“If something were to happen, if you were to get into a bad vehicle accident, it’s important that you’ve paid for that insurance so you’re not in an even worse situation if that happens down the road,” said Madison Schalk, Dennis Bost State Farm marketing manager in Little Rock. “That can be exponentially more expensive.”
Arkansas law requires every car owner to carry liability insurance. According to Schalk, insurance agencies statewide have seen auto insurance rates go up.
“We’ve had a lot of claims related to weather, natural disasters between hail, wind, all kinds of things, and so the companies are having to raise rates right now to compensate for that,” Schalk said. “That way we all know that we’re putting in enough to be covered if we have to make a claim.”
Schalk said another factor could be the rise in crime across the country, with the National Insurance Crime Bureau reporting that nearly 500,000 vehicles were stolen across the country in the first half of 2023.
“When we see things like vandalism to vehicles or break-ins, that would be recorded as a comprehensive claim,” Schalk said. “If we see an increase in that, especially in a particular area, that can lead to an increase in rates in that area.”
Labour and parts costs also play a significant role.
Business owners like D. Coleman, owner of Coleman and Son Automotive in Little Rock, said that’s the cost he’s seen.
“I’ve seen my personal insurance go up at least 20% in the last year,” Coleman said. “They say, of course, they use natural disasters, of course, inflation, and just, it’s time for an increase.”
Coleman said that while he’s in the business and sees the damage every day, the rising cost of his car insurance is a bullet he’s willing to bite.
“If you go as slow as 10 miles per hour, you can see over $1,500 to $2,000 worth of damage,” Coleman said. “Just a bumper damage can cost that much in repairs, and you don’t want to have to pay that out of pocket.”
