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Consumer
Frequently Asked Questions |
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PRIVATE PASSENGER
AUTOMOBILE INSURANCE Q. What
coverages are mandatory? A.
Every automobile owner must have liability coverage. Liability coverage pays for any claims when
you are at fault in an accident. The
minimum liability you are required to carry by law is $25,000 per
person for bodily injury, $50,000 per accident and $25,000 to cover
property damage to other’s property. Almost
all insurers offer higher limits. When you apply for liability
coverage, you must be offered an opportunity to purchase coverage for
uninsured motorist bodily and property damage, underinsured motorist
coverage for bodily injury and personal injury protection coverage. Uninsured motorist coverages
cover you and your automobile if the other driver is at fault and does
not have liability insurance. Underinsured motorist
coverage gives you additional protection if the other driver is at
fault and doesn’t have enough coverage to cover your injuries. Personal Injury Protection
provides you with wage loss, death benefits and medical coverage
regardless of fault. Q. What other
coverages are available? A.
You may also purchase comprehensive and collision
coverages. Comprehensive coverage protects
against damage to your automobile from acts of nature or other events
not associated with operating the automobile. Collision
coverage protects against damage to your automobile when it is involved
in an accident. Q. Are there
any discounts that must be offered? A.
Yes, the College Graduate Discount and Defensive
Driver Discount for those insureds 55 and over who have successfully
completed a course approved by the Office of Driver Services. Check with your agent for any other discounts
your insurer may offer. Q. Why have
my rates gone up when I haven’t had an accident and/or claim? A.
Probably because the insurer increased its overall rates
because it has paid out more losses than expected. You may
personally receive a lower or higher rate based upon various factors. Q. Why
haven’t my physical damages premiums decreased as my vehicle ages? A.
The price of repairing vehicles does not go down as a
vehicles ages. Q. Will my
policy cover me if I rent an automobile? A.
This can vary by company. You
should ask your agent if your policy covers you, those you might injure
if at fault, and the rental agency’s automobile. |
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HOMEOWNERS INSURANCE Q. What
coverages are mandatory? A.
You are not required to have homeowners coverage by any Q. What
different types of homeowners coverages are available? A.
There are several different types, but most homeowners
carry full coverage for all perils including losses associated with any
sudden and accidental event. In the case
your home is totally destroyed, you may wish to consider having
replacement cost coverage so that you can rebuild your home. The all perils coverage usually includes
coverage for your liability to your guests. Other types of homeowners
insurance cover only fire and weather events. Some
are designed specifically for renters. Q. Can
insurance companies use my credit information to deny me insurance or
to increase the premium I pay? A.
An insurance company may use credit AS PART of the process
of determining whether coverage will be provided and what it costs. A Consumer Brochure on use of credit in
homeowners and personal automobile insurance is now available. This brochure, “Understanding
How Insurers Use Credit Information,” contains
information about Act 1452 of 2003 and its affect on the use of credit
information in homeowners and personal automobile insurance
underwriting and rating. Q. What is a
public protection classification? A.
A rating determined by the equipment, manpower, water
source and other factors of a fire district. Classifications
range from 1 to 10, with 10 being a very rural area with very little
fire protection. Q. Who
determines a public protection classification? A.
The Insurance Services
Office, or ISO, inspects local fire departments and sets the
classification. Q. How does
it effect my homeowners premium? A.
Generally, the lower the protection class rating the lower
the base premium. You can contact your local fire department and ask
them for their “ISO public protection class rating”. Q. What is
the difference in replacement cost (RC) and actual cash value (ACV)? A.
ACV allows for depreciation in determining how much to pay
you on your claim while replacement cost does not. Q. How do I
know what type of policy I have (RC or ACV)? A.
You may wish to contact your agent. You
can also read the loss settlement provision of your policy. Q. Why have
my rates gone up when I haven’t filed any claims? A.
Probably because the insurer increased its overall rates
because it has paid out more losses than expected. You may
personally receive a lower or higher rate based upon various factors. |
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INSURANCE PREMIUMS Q. Does the
Insurance Department set insurance rates? A.
No, that is a common misconception
regarding the Department’s oversight of rates.
Proposed rate changes by insurers must be filed with the
Arkansas Insurance Department at least twenty (20) days prior to the
effective date. We have broad authority to
review how the rate is distributed among insureds according to factors
that might predict future losses, but we cannot
disapprove an overall rate unless it is actuarially “excessive,
inadequate or unfairly discriminatory.” “Excessive.” A rate becomes excessive
when the loss ratio (losses divided by premiums paid) drops to a point
which results in the insurance company earning an excessive amount of
profit. “Inadequate.” A rate is inadequate if it
will lead to solvency problems immediately or has the potential for
long-term solvency implications in that it may not provide sufficient
fund to pay future claims, the costs of adjusting those claims and
operating the business. “Unfairly
Discriminatory.” All insurance discriminates
among various risks. There is
“fair,” i.e., “legal” discrimination, and
“unfair,” i.e., illegal discrimination.
Cross-subsidies encourage risky behavior in some risk
categories. Therefore, allocating the
premiums among risks tends to discourage risky behavior.
“Unfair” discrimination basically means not
treating similar risks the same in rates and coverages. Q. What rates
are reviewed? A.
We review private passenger auto, homeowners,
workers’ compensation and professional liability insurance rates. |
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WORKERS COMPENSATION Q. What part
does the Arkansas Insurance Department play in workers’
compensation issues and claims? A.
The |
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HEALTH
INSURANCE Q. What is a
“pre-existing condition”? A.
It is a health condition you had before you purchased your
health insurance coverage, such as cancer, regardless of whether you
received a diagnosis or treatment before the purchase.
Health carriers can sometimes refuse to cover your
pre-existing conditions. Q. When can
my health insurance carrier exclude coverage for my pre-existing
conditions? A.
There are several circumstances in which your health
carrier can refuse to cover your pre-existing conditions.
Pre-existing conditions can always be excluded if you buy
an individual health insurance policy. For
group health policies, pre-existing conditions can only be excluded
under the following circumstances:
Q. Can my
pregnancy be excluded as a pre-existing condition? A.
In a group health plan, No; under an individual policy,
Yes. If you are going to buy an individual
policy, always buy a maternity rider if you may become pregnant! Q. I have
been offered a health insurance policy by a company I have never heard
of. The rate is very low, and this looks
too good to be true! Should I buy it? A.
Unauthorized health insurance has been a big problem in
Arkansas in recent years. Hundreds of
Arkansas consumers have purchased insurance from companies they thought
were legitimate, only to be left with thousands of dollars in unpaid
medical claims. Keep in mind that if something looks too
good to be true, it probably is! Always
call the Arkansas Insurance Department if you are unsure about an
insurance product you are offered. We can
check to make sure that both the insurance carrier and producer
offering it are properly licensed. Here
are some other danger signs:
Health discount cards are
regulated by the Arkansas Attorney General. If
you have questions about health discount cards, please contact the
Attorney General’s office at 1-800-482-8982. Q. What is
Arkansas' Any Willing Provider Law? A.
Arkansas' “Any Willing Provider Law” provides
that persons in group or individual health plans or HMOs will be able
to go to the doctors or hospitals of their choice, if the doctor or
hospital agrees to the terms and conditions of that
person's health insurer or HMO. A
provider will have to apply for admittance to a network and go through
the network’s credentialing process; a network cannot take more
than 180 days to process a provider’s application.
Follow this link to Directive 2-2005 for more information: http://www.insurance.arkansas.gov/PandC/PCDirectives.htm Q. How long
does a health insurance company have to pay a health insurance claim? A.
Health insurance companies, including HMOs, have 30 days
to pay a claim to either you or your medical provider, if the claim is
electronically filed with the health insurance company. If the claim is
mailed to the health insurance company, the health insurance company
has forty-five days to pay the claim. All of these time deadlines
assume that the claim is considered a "clean claim," or a claim falling
squarely under coverage under the health plan, in which no further
information is needed by the health insurer to process the claim. If
the claim is however not "clean" or the health insurer needs more
information to process the claim, the health insurer is allowed 30
days to collect the information, and after all of the required
information is received by the health insurer, the 30 (electronic) and
45 (non-electronic) day payment rules then apply. Q. Is
Maternity a mandated benefit? A.
No, it is not mandated by the Arkansas Insurance
Department. Complication of Pregnancy is a
covered benefit. In employer groups of
more than 15 employees, Title VII of the Civil Rights Act of 1964
states that any health insurance provided must cover expenses for
pregnancy-related conditions on the same basis as expenses for other
medical conditions. Q. Is
In-Vitro Fertilization a mandated benefit? A.
Yes, refer to ACA §23-85-137, ACA 23-86-118 and Rule
and Regulation 1. It is a benefit on
a policy which provides normal pregnancy-related benefits.
It does not apply to HMO’s or to self-insured plans. Q. In what
situation is a newborn automatically covered under an insurance policy?
A.
Under ACA §23-79-129 – If an insured has a
policy (individual or group), that covers the insured and at least one
family member (spouse or child), then a newborn must be covered from
birth for at least 90 days. If an insured
has an individual policy or certificate with no dependents, in most
situations, the newborn will have to go through underwriting unless
otherwise stated by contract language. Q. Is there a
state continuation law for health insurance? A.
Yes, state continuation is for 120 days as outlined under
ACA 23-86-114. Q. Can a
medical provider file a complaint with the Department for slow payment
issues against a health insurer or HMO? A.
Yes. The Department, however, requires that the medical
provider provide evidence in the complaint showing a "pattern of slow
payment" practices by the health insurer or HMO. Q. Are there
statutes or Rules concerning the use of age and gender as underwriting
criteria in Arkansas? A.
Yes. An insurer should consider the relevant provisions of
the Arkansas Trade Practices Act, Ark. Code Ann. § 23-66-206. However, if age and gender are proven to be a
substantial factor as an underwriting criteria by the alleged
discriminator, then an insurer is not prohibited from using it as a
criterion to charge different rates to different customers. |
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External
Review Q. What
is external review? A.
An independent review of claims for benefits (treatment or
services) to see if they are medically necessary or
experimental/investigational. The requested benefit must be at least
$500 for external review to apply. Q. What if I
need the requested treatment as soon as possible? A.
You may qualify for expedited external review, where a
decision is rendered as soon as necessary, but no later than 72 hours
after the IRO receives the request for external review. Q. What type
of plans does external review apply to? A.
All health insurance plans, except specified disease,
limited supplement benefit, long-term care insurance, self-insured
plans, CHIP pool, Medicare, WC, or automobile med pay.
(For more specifics, see Section 1 E)
Q. What
if I, or my health insurance carrier, don’t like the IRO’s decision? A.
Then you can file a lawsuit. Both
the health carrier and the covered person have the right to go to court. Q. Who
can request external review? A.
The person covered under the health insurance policy
and/or that person’s authorized representative.
An “authorized representative” is:
Q. Who
performs external reviews? A.
An independent review organization (“IRO”)
certified by the Department. It is
independent of both the insurance company and the covered person. Q. When can I
request an external review? A.
After your claim for treatment or services, which have to
be at least $500, has been denied as being not medically necessary or
as being experimental/ investigational. Generally,
you have to exhaust your heath carrier’s internal appeal process
before requesting external review. Q. When do I
have to request an external review? A.
You have sixty days after you receive an initial denial or
a final denial (after the carrier’s internal appeals process is
completed). Q. Where
can I find out about external review? A.
Your health insurance carrier should provide this
information in your policy. Also, your
health carrier is required to give you information about your right to
an external review after it initially denies payment for your claim as
not being medically necessary or as being experimental/investigational. Most carriers have an internal appeals
procedure, and if your claim is still denied after the internal appeals
process, your carrier must again tell you about your right to external
review. Q. Where can
I find out more about external review? A.
You can call your health carrier or the Arkansas Insurance
Department. Q. How do I
request an external review? A.
Your health carrier will give you this information in your
policy and after your claim is denied. Q. How much
does it cost to have an external review? A.
The covered person pays a $25 filing fee, but this is
refunded if the carrier’s decision is overturned.
The fee does not apply to a request of an expedited
review, and it can be waived by the Commissioner if the covered person
would suffer undue financial hardship. The
health carrier pays for the cost of the external review. Q. How long
does it take the IRO to complete an external review? A.
Within 45 calendar days of the IRO’s
receipt of the request for the external review. For
an expedited review, the review is completed as soon as necessary, but
no later than 72 hours after the IRO receives the request for expedited
review. Q. Why does
external review only apply to claims that are denied as not being
medically necessary or as being experimental/investigational? A.
Because other terms in your insurance policy are agreed
upon by you or your employer when you sign up for the coverage. Doctors can differ, though, on what is
experimental/investigational or medically necessary. |
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miscellaneous Q. Are
Professional Employer Organization services (PEO) licensed in Arkansas? A.
Yes. By using our Company
Search database you can find out if someone offering PEO services
holds a valid license to sell those services. You
can also get a complete listing of every licensed PEO doing business in
Arkansas. Q.
What is the difference between a PEO and an
Employee Leasing Firm? A.
None. In 2003, the name of
the license was changed from an Employee Leasing license to a
Professional Employer Organization license. The
definition of what constituted these business was not changed. Q. Is there
insurance available for damage caused by earthquakes? A.
Yes. A Market Assistance
Program (MAP) has been developed as a result of the Arkansas Earthquake
Authority Act of 1999. The MAP is designed to assist consumers who are
unable to find residential earthquake insurance through traditional
sources. Additional information is available by calling 1-800-852-5494. On homeowners coverages,
your company must tell you if it does not offer earthquake coverage and
provide you with information on how to obtain coverage through the MAP. Q. High-risk
insurance pools, what are they and how do I find them? A.
High risk pools are designed to provide coverage for
consumers who are unable to secure insurance in the voluntary market.
The Property and Casualty Division of the Arkansas Insurance Department
manages the residual or assigned risk plans for workers' compensation
and automobile insurance. Additionally, fire insurance is available
through a Rural Risk Underwriting Association, which provides coverage
for structures located in rural areas--where coverage is not available
in the voluntary market. Contact
your insurance agent for specifics.
Here is a listing of the administrators of the various
pools: National Council on
Compensation Insurance (NCCI) Little Rock, AR-501-834-9123
or 1-800-622-4271 Arkansas Rural Risk
Underwriting Association (ARRUA) 1-800-272-6588 (Arkansas
only) 1-800-233-2398 (out of state) Arkansas Automobile
Insurance Plan (Agents only...Consumers
must access this plan through their insurance agent.) 1-800-413-5808 Earthquake Market Assistance
Program 1-800-852-5494 Q. What is
“Surplus Lines” and when can I buy insurance from a surplus
lines company? A.
When licensed insurers are unwilling or unable to provide
needed coverage, you may secure coverage with an approved surplus line
insurer through a licensed surplus line broker. Individuals or
corporations may secure insurance coverage directly from a non-admitted
insurer. This coverage is considered "self-procured."
Your agent can help you if surplus lines coverage is
required. Surplus lines insurance is
regulated by Rule
24. Q. Does the
Arkansas Insurance Department license or regulate premium finance
companies? A.
We do not. Federal and
State Bank regulators do that, along with U.S. Attorney and the
Arkansas Attorney General. Contact the Arkansas
Attorney General on-line via links from the State website at www.ag.arkansas.gov. Q. May
producers charge insureds fees over and above gross premiums
charged by carriers on the policies delivered to the insureds? A.
In general, Ark. Code Ann. § 23-66-310 allows a
producer to charge a fee in excess of the premiums as long as: a.
The fee is separately disclosed on the insured’s
bill; and b.
The fee does not exceed 20% of the premium.
Q. May I
buy an insurance policy on other people or property? A.
It depends. If you are related to a person in
ways approved under the law, you may. You may if you have
title to real property or personal property, such as a car or
boat. If your company considers you to be a key
officer or director or manager, it may take out a life policy
on your life to benefit the business. Anyone seeking to buy insurance on other
people or property must have an "insurable interest" at the
time the insurance contract is made and sometimes when the loss
occurs, too. The law is found at Ark. Code Ann. §§
23-79-103 (for insurance interests in people) and 23-79-104 (for
insurance interests in property). Q. What is
the "Valued Policy" law on total fire losses of buildings and real
property?
A.
The valued policy law, Ark. Code Ann. §23-88-101,
covers losses on real property, such as a house, from fire and
natural disasters. Basically the valued policy law says that,
absent an insurer defense such as arson or other insurance fraud, the
insurer for a total loss on real property owes the full face amount
(total policy price in $ dollars) of the policy without depreciation or
contesting the value. Insurance companies in rural areas
must pay rural volunteer fire fighter claims out of the insurance
proceeds first before paying the homeowner if the homeowner has not
paid its rural district fire association dues timely, under Ark. Code
Ann. § 23-88-102. The valued policy law does not apply to:
Q. How can I tell
if my insurance binder is any good? A.
Insurance binders are temporary policies of insurance
that are generally issued by insurance producers, though sometimes they
come direct from the insurance company. But not every agent or producer
even has authority from the insurance company to issue a binder or
short-term policy. Ask the agent or producer for something to
show that he/she does have full authority, and that the insurer will
honor the terms of the binder. The binder
must be replaced by a full policy in 90 days or less and the policy
must match (or not conflict with) the full policy when the consumer
receives it. Q. I have a
prepaid funeral contract with a funeral home. I now want to switch
funeral homes and want to transfer the money I paid the first funeral
home to the new one. Can I cancel with the first funeral home and
transfer the money to the new one? A.
Yes, as long as the prepaid funeral contract was entered
into by you before July of 1995. You need to notify the first funeral
home you want to transfer your prepaid funds over to a substitute
funeral provider (the new funeral home). The law requires the first
funeral home to transfer all of the proceeds to the new funeral home,
what you paid down to fund the contract, minus the built up interest. Q. Do the
State or Federal Do Not Call laws apply to the business of insurance
and insurance agents? A.
Yes. The Department is able
to provide you some general information, but please remember that the
enforcement authority for the Do Not Call law (both State and Federal)
lies with the Arkansas Attorney General's Office. Below is the link to
their website for further information; you will need to contact the
Consumer Protection Division of the Public Protection Department: Unlike the Federal Trade
Commission's Do-Not-Call rule, the Federal Communication Commission's
(FCC) Do-Not-Call Rule applies to the insurance industry. Insurance
agents who use the telephone or send faxes will have to follow the
FCC's Rule and check the national do-not-call list even in states that
have exempted insurance agents from their do-not-call rules (like
Arkansas!). If an agent has an "established business
relationship" with a client and that client has placed his or her name
on the do-not-call list, the agent is still allowed to call his or her
client at home. An established business relationship
exists where the client has made a purchase or entered into another
transaction within the 18 month period prior to the call or when an
inquiry or application has been made within 3 months before the
call. Nonetheless, "cold" calls to numbers on the Do-Not-Call
list are prohibited unless express written permission has
been given to call. Compliance with the FCC
Do-Not-Call Telemarketing Rule has been required since 10/1/2003.
There is also a Do-Not-Fax Rule effective 1/1/2005. Also, the National
Association of Insurance and Financial Advisors has made a joint filing
with the American Council of Life Insurers (ACLI) in 11/2003 asking the
FCC to clarify the definition of "established business relationship"
under the do-not-call rules. The Department encourages
you to contact the FCC directly and inquire about the applicability of
the federal Law to intra-state phone calls, i.e., phone calls
made in-state only from an AR producer to an AR
consumer. It is the Department’s understanding that there
is existing confusion as to the applicability of the former
state-exception for insurance under the new Do Not Call provisions. The FCC's website and contact information
is: http://www.fcc.gov/contacts.html Q. Are proceeds on life
insurance protected from creditors? A.
Yes, life proceeds are exempt as stated in Ark. Code Ann.
23-79-131. Q.
Are annuity proceeds protected from creditors? A.
Yes, annuity proceeds are exempt as stated in Ark. Code
Ann 23-79-134. Q. If a
company selling long-term care insurance goes into liquidation what
would be covered under the Guaranty Fund? A.
The amount of coverage would be $300,000, or policy
limits, whichever is less. The policies not in claim status would
be sold to a solvent insurance company. The policyholder would
receive notice of this, a certificate from the assuming company and
information as to where to send premium payments, make inquiries, file
claims, etc. If the policy is in claim status, the guaranty
fund would pay on the policy until the limit of coverage was reached. Q. I have a
policy issued by Union Life Insurance Company. Can
you tell me who has control of this policy and who can I contact to
discuss the policy? A.
In 1990 Union Life Insurance Company was merged into
Jefferson National Life Insurance Company. Jefferson National was
later merged into Great American Reserve and Great American Reserve was
later merged into Conseco Life Insurance Company. Union
Life’s life business was transferred into Conseco Variable
Insurance Company. Conseco Variable
Insurance Company changed its name to Jefferson National Life Insurance
Company and entered into an agreement with Protective Life Insurance
Company of Birmingham, Alabama to service the Union Life business. You
may call 1-800-866-3555 to talk to a customer service
representative. To inquire about your policy use the letters KK
and then your original policy number when referring to your policy
number. Q. Must a
licensed automobile dealer provide primary insurance on loaner cars? A. No. Typically, insurance coverage follows the automobile and not the person. However, Ark. Code Ann. § 27-19-713(l) provides an exception to licensed automobile dealerships; under this statute, they are not required to carry primary insurance coverage on every vehicle in their car lot. This law eases the insurance burden on the dealerships by extending the insured’s coverage to instances in which the dealership loans a vehicle to the insured. |
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