AR Property & Casualty cheat sheet

The Arkansas Insurance Department, headed by the Insurance Commissioner (appointed by the Governor), licenses producers and insurers and enforces the state Insurance Code.

A resident producer license requires passing the state licensing exam, filing an application, and completing a fingerprint-based criminal background check; nonresident producers are licensed through reciprocity.

Continuing education for resident producers is 24 credit hours per two-year license term, including 3 hours of ethics.

A producer must notify the Commissioner within 30 days after another jurisdiction takes an administrative action against the producer's license.

The Commissioner has authority to examine the books and records of insurers and producers, and the examined insurer bears the cost of the examination.

Rebating (offering anything of value not stated in the policy) and misrepresentation of policy terms are prohibited unfair trade practices.

Premium funds a producer collects are held in a fiduciary capacity in trust and must not be commingled with the producer's personal or business funds.

The Arkansas Property and Casualty Insurance Guaranty Association pays covered claims of insolvent member P&C insurers, subject to statutory per-claim limits and funded by insurer assessments.

Soliciting, negotiating, or selling insurance without a license is prohibited and exposes the offender to cease-and-desist orders, monetary penalties, and criminal prosecution.

Risk is uncertainty concerning loss; a peril is the cause of loss (fire, windstorm); a hazard is a condition that increases the chance or severity of loss.

Three hazard types: physical (structural or occupancy conditions), moral (dishonest intent, e.g., arson), morale (carelessness or indifference because insurance exists).

Characteristics of an insurable risk: pure and accidental, definite and measurable, calculable loss, large number of similar exposure units, and not catastrophic to the insurer.

Six characteristics of an insurance contract: contract of adhesion, aleatory, unilateral, conditional, personal, and utmost good faith.

The principle of indemnity restores the insured to the pre-loss financial position and bars profit from a loss; policy valuation clauses determine the payment amount.

Subrogation transfers to the insurer, after payment, the insured's right to recover the loss from the negligent third party who caused it.

Valid contract elements: offer and acceptance, consideration, legal purpose, and competent parties.

Risk management techniques are avoidance, retention, loss reduction, sharing, and transfer; insurance is the primary transfer method.

Under the law of large numbers, as the number of similar independent exposure units increases, actual loss experience approaches the expected or predicted loss.

HO-3 insures the dwelling and other structures against open perils and personal property against named perils; HO-5 insures both dwelling and contents against open perils.

Homeowners Coverages A through D are dwelling, other structures, personal property, and loss of use; Coverages E and F are personal liability and medical payments to others.

Common HO-3 special dollar limits: $200 money, $1,500 securities, $1,500 jewelry and furs for theft, $2,500 firearms for theft, $2,500 silverware for theft.

HO-4 (renters) and HO-6 (condo unit-owners) insure personal property and liability; the HO-6 limit on building items is narrow because the association insures the structure.

Dwelling coverage is settled at replacement cost when insured to at least 80% of replacement cost; personal property is settled at actual cash value unless endorsed.

Commercial property coinsurance requires a limit equal to a stated percentage of value (usually 80%); recovery is reduced by (limit carried ÷ limit required) × loss.

Standard property exclusions include earth movement, flood, ordinance or law, neglect, intentional loss, and business pursuits; limited water backup coverage is available by endorsement.

NFIP flood insurance is written separately with a 30-day waiting period; residential maximums are $250,000 on the building and $100,000 on contents.

Dwelling policies DP-1 (basic), DP-2 (broad), and DP-3 (special) insure non-owner-occupied or ineligible risks and exclude liability unless added by endorsement.

CGL Coverage A pays bodily injury and property damage; Coverage B pays personal and advertising injury; Coverage C pays medical expenses for injuries on the premises regardless of fault.

An occurrence form covers injury or damage occurring during the policy period whenever the claim is filed; a claims-made form covers claims first made during the period, subject to a retroactive date.

CGL limits include each occurrence, general aggregate, products-completed operations aggregate, personal and advertising injury, and damage to premises rented to you.

Personal auto policy parts: A liability, B medical payments, C uninsured/underinsured motorists, D damage to your auto (collision and other than collision).

Split limits (e.g., 25/50/25) state per-person bodily injury, per-accident bodily injury, and property damage amounts; a combined single limit applies one amount per accident.

Workers compensation pays statutory medical, disability, and death benefits regardless of fault, and the exclusive remedy rule bars the employee from suing the employer.

An umbrella policy pays excess over required underlying limits and can drop down over a self-insured retention for exposures not covered by underlying policies.

Business auto coverage is designated by symbols 1 through 9, which identify covered autos such as any auto, owned autos, hired autos, and non-owned autos.

Financial responsibility laws require proof of ability to pay for auto accident losses; no-fault laws pay first-party PIP benefits and restrict tort recovery by threshold.