Arkansas Insurance Department

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FREQUENTLY ASKED QUESTIONS

 

PRIVATE PASSENGER AUTOMOBILE INSURANCE

What coverages are mandatory? 

What other coverages are available?

Are there any discounts that must be offered? 

Why have my rates gone up when I haven’t had an accident and/or claim?

Will my policy cover me if I rent an automobile?

 

HOMEOWNERS INSURANCE

What coverages are mandatory?

What different types of homeowners coverages are available?

Can insurance companies use my credit information to deny me insurance or to increase the premium I pay?

What is a public protection classification?

Who determines a public protection classification?

How does it effect my HO premium?

What is the difference in replacement cost (RC) and actual cash value (ACV)?

How do I know what type of policy I have (RC or ACV)?

Why have my rates gone up when I haven’t filed any claims?

 

WORKERS COMPENSATION

What part does the Insurance Department play in workers' compensation issues and claims?

 

PROFESSIONAL EMPLOYER ORGANIZATION

Are Professional Employer Organization services (PEO) licensed in Arkansas?

What is the difference between a PEO and an Employee Leasing Firm?

 

EARTHQUAKES

Is there insurance available for damage caused by earthquakes?

 

INSURANCE POOLS

High-risk insurance pools, what are they and how do I find them?

 

INSURANCE PREMIUMS

Does the Insurance Department set insurance rates?

What rates are reviewed?

What is “Surplus Lines” and when can I buy insurance from a surplus lines company?

 

PRIVATE PASSENGER AUTOMOBILE INSURANCE

What coverages are mandatory? 

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

 

What other coverages are available?

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.

 

Are there any discounts that must be offered? 

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.

 

Why have my rates gone up when I haven’t had an accident and/or claim?

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.

 

Why haven’t my physical damages premiums decreased as my vehicle ages?

The price of repairing vehicles does not go down as a vehicles ages.

 

Will my policy cover me if I rent an automobile?

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.

 

HOMEOWNERS INSURANCE

What coverages are mandatory?

You are not required to have homeowners coverage by any Arkansas law.  However, if you have a mortgage on your home, you may be required by your mortgage agreement or loan agreement to carry full coverage or be in breach of your agreement.  Your lending institution may have more information on what levels of coverage it requires you to maintain.

 

What different types of homeowners coverages are available?

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.

 

Can insurance companies use my credit information to deny me insurance or to increase the premium I pay?

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 contains information about Act 1452 of 2003 and its effect on the use of credit information in homeowners and personal automobile insurance underwriting and rating.  Please email our Consumer Services Division or visit its webpage.

 

What is a public protection classification?

A rating determined by the equipment, manpower, water source and other factors of a fire district.  Ranges from 1-10 with 10 being a very rural area with very little fire protection.

 

Who determines a public protection classification?

The Insurance Services Office, or ISO, inspects local fire departments and sets the classification.

 

How does it effect my HO premium?

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”. 

 

What is the difference in replacement cost (RC) and actual cash value (ACV)?

ACV allows for depreciation in determining how much to pay you on your claim while replacement cost does not.

 

How do I know what type of policy I have (RC or ACV)?

You may wish to contact your agent.  You can also read the loss settlement provision of your policy.

 

Why have my rates gone up when I haven’t filed any claims?

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.

 

WORKERS COMPENSATION

What part does the insurance department play in workers compensation issues and claims?

The Insurance Department is only involved in approving what rates and forms insurance companies use to insure the employer.  We have no part in the determination of whether a claim is covered under workers compensation.  That responsibility rests with the Arkansas Workers Compensation Commission.

 

PROFESSIONAL EMPLOYER ORGANIZATION

Are Professional Employer Organization services (PEO) licensed in Arkansas?

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.

 

What is the difference between a PEO and an Employee Leasing Firm?

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.

 

EARTHQUAKES

Is there insurance available for damage caused by earthquakes?

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.

 

INSURANCE POOLS

High-risk insurance pools, what are they and how do I find them?

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

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

 

INSURANCE PREMIUMS

Does the Insurance Department set insurance rates?

The Property and Casualty Division, with some exception reviews insurance policies prior to distribution and use by insurance companies. These policies are reviewed to ensure compliance with Arkansas law.  Forms must be approved prior to use except for some limited exceptions.

 

Proposed rate changes by insurers must be filed with the Arkansas Insurance Department at least twenty (20) days prior to the effective date. If the requested rate change is determined to be neither excessive, inadequate, or unfairly discriminatory, it is marked as "filed" by the Insurance Department and the insurer may begin to use the new rate twenty (20) days after the "filed" date.

 

What rates are reviewed?

We review, private passenger auto, homeowners, workers compensation and professional liability insurance rates.

 

What is “Surplus Lines” and when can I buy insurance from a surplus lines company?

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.