Arkansas Personal Lines Study Guide

Arkansas personal lines rests on two pillars, and both contain a trap for anyone who studied the national material first. The auto pillar looks like an ordinary tort state until you notice Arkansas mandates that PIP-style coverage be offered. The cancellation pillar looks simple until you notice that auto and homeowners share every notice period except the one about giving reasons. Work through both carefully — the Arkansas-specific section of your exam is scored on its own.

Auto — a tort state that still makes you offer first-party coverage

Arkansas is fault-based (tort). It is not a no-fault state (§ 23-89-202). The mandatory liability limits are 25/50/25 — $25,000 bodily injury per person, $50,000 per occurrence, $25,000 property damage (§ 27-22-104(b)).

And then the part that catches people. Although Arkansas is a tort state with no no-fault regime, it mandates that first-party, PIP-style coverage be OFFERED, rejectable in writing. If the insured does not reject it, the policy carries:

• $5,000 medical
• Income replacement of 70%, capped at $140 per week, for 52 weeks
• $5,000 accidental death

Uninsured motorist coverage is mandatory unless rejected in writing, at a minimum of 25/50 (§ 23-89-403). Underinsured motorist must be offered, is rejectable in writing, and — note the dependency — is available only if UM is elected (§ 23-89-209). For drivers the voluntary market will not take, the Arkansas Automobile Insurance Plan (AAIP) is the assigned-risk mechanism.

The 50% bar — and why “equal to” matters

Arkansas applies modified comparative negligence with a 50% bar. Section 16-64-122(b) bars a claimant whose fault is “equal to or greater than” the defendant’s — so at exactly 50/50, the claimant recovers nothing.

That phrase is the whole question. States running pure comparative fault let a 99%-at-fault claimant recover 1%. States running a 51% bar let a claimant at exactly 50% recover half. Arkansas does neither: fifty percent is already too much.

Cancellation and nonrenewal — same numbers, different reasons rule

Arkansas is merciful in one respect: auto and homeowners run on the same notice periods. During roughly the first 60 days a policy is in force, the insurer has broader cancellation rights and is not confined to the enumerated statutory grounds (§ 23-89-303(b); § 23-66-206(15)). After that:

• Cancellation for nonpayment — 10 days’ notice, with the reason
• Cancellation for cause — 20 days’ notice
• Nonrenewal — 30 days before expiration, for both auto and homeowners

Where the two lines split is on whether the insurer must say why. For auto, the reason must be stated on the insured’s written request, made at least 15 days beforehand (§ 23-89-305). For homeowners, the nonrenewal statute does not require the reason to be given at all (§ 23-88-105).

The residual market is rural, not urban

Most states with a residual property market run a FAIR Plan aimed at urban risks the voluntary market avoids. Arkansas has no FAIR Plan. What it has instead is the Arkansas Rural Risk Underwriting Association (ARRUA), which provides property coverage for rural risks that cannot obtain it voluntarily (§§ 23-88-301 to -309).

That inversion is worth holding, because it tells you something about the state’s risk profile: Arkansas’s uninsurable property problem has historically been distance and dispersion rather than urban concentration. The dominant catastrophe perils are tornado and severe storm, earthquake — northeastern Arkansas sits over the New Madrid Seismic Zone — and flood.