The homeowners forms and coverages are explained in the national guide, based on ISO HO 00 03 05 11. Arkansas's homeowners questions focus on cancellation rules (Ark. Code 23-66-206(15)), earthquake coverage notices (23-102), the valued policy law (23-88-101), the Rural Risk Underwriting Association, and the claim rules in Rule 43.

Cancelling a homeowners policy (23-66-206(15))

Scope. This rule covers property and casualty policies other than personal auto, workers' compensation, and employers' liability, which have their own rules.

First 60 days. For a policy in force 60 days or less, the insurer may cancel with at least 20 days' notice, or 10 days for nonpayment.

After 60 days, the insurer may cancel mid-term only for:

1. nonpayment of premium
2. fraud or material misrepresentation
3. a material change in risk that substantially increases a hazard insured against
4. a violation of a local fire, health, safety, building, or construction ordinance that substantially increases a hazard
5. nonpayment of membership dues that the insurer's bylaws require
6. a material violation of a material policy provision

An insurer's decision to stop writing in a county is not on the list.

Notice.

Notice goes to the named insured and to any lienholder or loss payee named in the policy.

Underwriting limits (23-66-206)

These refusals are unfair discrimination unless there is a non-pretextual business purpose or a legal requirement:

• refusing to insure a home solely because of its age
• refusing based on the geographic location of the risk

Refusing coverage just because a prior insurer nonrenewed the applicant is an unfair practice.

Earthquake (23-102)

• Earthquake is not covered under a basic homeowners or farmowners policy unless added by endorsement (23-102-102).
• Insurers writing homeowners, farmowners, and fire policies must notify policyholders without residential earthquake coverage of their possible eligibility. The notice goes out at least three times over four years and does not itself provide coverage (23-102-114).
• A new applicant who doesn't want earthquake coverage must reject it in writing on the application or an addendum.
• For the Arkansas Earthquake Authority, one "event" includes all earthquakes in the following 72 hours (23-102-103).

Valued policy law (23-88-101)

When insured real property is totally destroyed by fire or natural disaster, the policy is a liquidated demand for the full amount stated in the policy. Exceptions:

• It doesn't apply to flood or earthquake policies, personal property, or detached structures.
• It doesn't apply when the insured caused the loss through a criminal act or fraud.
• With two policies on the same building, the insured recovers the lesser of the highest single policy limit or the insured's interest.

Residual market: Rural Risk Underwriting Association

Arkansas has no FAIR plan. Instead:

• The Arkansas Rural Risk Underwriting Association provides property insurance for insurable rural risks that can't find coverage voluntarily (23-88-301, -303).
• All insurers licensed to write property insurance must be members, and farmers' mutual aid associations count as insurers.
• A seven-member board is appointed by the Commissioner.
• Assessments are capped at 2% of prior-year net direct written premium.
• Members get a credit for rural property they write voluntarily.
• An applicant who meets the plan's reasonable underwriting standards is entitled to coverage.

Property claims (Rule 43)

An insurer may not:

• require a claimant to calculate depreciation on a personal property proof-of-loss form
• deny a claim for failure to show the damaged property unless it demanded inspection and the refusal was unfounded
• refuse to settle a first-party claim because someone else should pay
• delay payment under one coverage to force a settlement under another

The 15-working-day accept-or-deny deadline doesn't apply when the insurer has a reasonable basis to suspect arson by the claimant.

Common exam traps

• Homeowners cancellation notice is 20 days, or 10 days for nonpayment, and lienholders get notice too.
• After 60 days, only the six listed reasons allow cancellation.
• New applicants must reject earthquake coverage in writing.
• The valued policy law pays the full face amount on a total loss of real property by fire or natural disaster. It doesn't cover personal property, flood, or earthquake policies.
• Arkansas uses the Rural Risk Underwriting Association, not a FAIR plan.